The IRS recently announced the Cost-of-Living Adjustment (COLA) with the defined contribution plan annual additions limit increasing from $70,000 to $72,000. The COLA percentage increased to 2.8% from 2.5% in 2025. For financial professionals working with retirement plan sponsors or highly compensated employees, share this important adjustment with your plan sponsors and their plan participants. Consider potential changes to their plans as soon as possible to help ensure they stay on track for retirement.

What is the cost-of-living adjustment?

Intended to ensure that the purchasing power of wages or benefits remains stable despite rising prices, the COLA is an annual, federally set guideline that indicates an appropriate increase in benefits and contributions to counteract inflation. It’s based on the percentage increase in the average Consumer Price Index (CPI) between the third quarters of the current and previous years.

How will the updated COLA affect retirement plans?

The new cost-of-living adjustment will affect the contribution limits for various retirement plans, including 401(k), 403(b) and 457 plans. For participants aged 50 and above, the catch-up contribution limits will also be adjusted. This change allows older employees to contribute more towards their retirement savings, helping them better prepare for their future. This year’s notice also includes the SECURE 2.0 Super Catch-up amount for participants ages 60-63 for 401(k), 403(b) and 457 plans.

Review our updated chart on the increased limits for benefits and compensation.

What’s particularly important about this most recent COLA announcement?

Today’s retirement savers face continuing challenges with inflation, high interest rates and global uncertainty. Fortunately, the Social Security Administration’s 2.8% cost-of-living adjustment is slightly higher than last year, and new IRS limits—$24,500 for 401(k)s and $7,500 for IRAs—give participants an opportunity to save more.

Importantly, the COLA also updates the compensation limits for determining contributions to retirement plans. If you have highly compensated employees who are not contributing as much as they might to help ensure their future stability, it may be a good opportunity to review the entire retirement plan strategy.

How to make the most of the IRS COLA announcement

First, take time to review our updated chart on the increased limits for benefits and compensation. Then, consider taking the following steps to help inform your retirement plan sponsors and their plan participants.

Review and update plans: Ensure all sponsored retirement plans are updated with the new contribution and compensation limits.

Schedule plan sponsor meetings: Discuss how the new COLA affects their retirement strategies and identify any new gaps or opportunities that their plan could address.

Provide educational materials: Share updated materials and resources with your plan sponsors explaining the changes and their implications. Ameritas offers a comprehensive range of participant-ready educational materials that cover many elements of the retirement planning process. Contact us today to learn more.

Read additional information about the 2026 cost-of-living adjustment announcement from the IRS. 

Disclosures

Representatives of Ameritas do not provide tax or legal advice. Please refer clients to their tax advisor or attorney regarding their specific situation.

SECURE Act fundamentals

Beneficiary IRA RMD rules established in 2025 by the SECURE Act have fundamentally transformed how Americans manage inherited retirement accounts. The regulations implemented earlier this year now require annual distributions for most beneficiaries subject to the 10-year rule, creating significant new planning considerations for financial professionals and their clients.

How will your clients be affected?

Understanding eligible designated beneficiaries

The SECURE Act eliminated lifetime “stretch” distributions for most beneficiaries, replacing this option with a 10-year drawdown period that can limit long-term tax-deferred growth opportunities. However, the SECURE Act also created a special category called Eligible Designated Beneficiaries (EDBs). These individuals receive more favorable distribution options and include:

• Surviving spouses.
• Children under age 21.
• Disabled or chronically ill individuals.
• Beneficiaries no more than 10 years younger than the account owner.

EDBs may take distributions over their life expectancy if the participant hadn’t started Required Minimum Distributions before death.

Beneficiary IRA RMD rules for non-EDBs

Non-EDBs face stricter requirements. For example, adult children who aren’t disabled or chronically ill must distribute the entire account within 10 years of the participant’s death.

If the original account owner had started Required Minimum Distributions before death, beneficiaries must:

• Continue annual RMD payments during years 1-9 following the death.
• Distribute the entire account balance by the end of the 10-year period.

Critical 2025 changes

Starting in 2025, many beneficiaries under the 10-year rule also face annual RMDs. RMD amounts will vary based on:

• Beneficiary’s age.
• Relationship to the deceased.
• Account value.

Note, the IRS waived the 25% excise tax for missed inherited IRA RMDs in 2024. However, the RMD requirement itself remains in effect.

Planning implications

Clients who missed RMDs from inherited IRAs since 2020 face significant catch-up requirements. They must take multiple years’ worth of RMDs in 2025 to avoid penalties.

To ensure your clients are prepared for these changes, review plan documents carefully. Some plans mandate shorter payout periods than regulations. Understanding these plan-specific distribution options can help your clients avoid costly mistakes.

For specific questions about how these changes affect plan sponsors and participants, please contact us at 800-745-9995.

Disclosures

Representatives of Ameritas do not provide tax or legal advice. Please refer clients to their tax advisor or attorney regarding their specific situation.

The SECURE Act 2.0, signed into law on December 29, 2022, as part of the year-end spending bill, builds upon the original SECURE Act of 2019. This comprehensive legislation was designed to expand access to employer retirement plans and encourage greater employee participation in retirement savings. At Ameritas, we’re committed to helping both plan sponsors and their participants navigate these changes for a more fulfilling life.

Below are some upcoming provision changes for your clients to keep in mind, as well as reminders about existing provisions.

2026 and beyond provisions

Roth treatment for catch-up contributions 

As of January 1, 2026, employees aged 50+ who earned more than $145,000 (indexed) in FICA wages in the prior year must make catch-up contributions as Roth. If your client’s plan document allows catch-up contributions, but does not allow Roth contributions, they will need to amend the plan to either add Roth contributions or remove catch-up contributions.

It’s important that plan sponsors speak with their payroll provider to ensure they’re prepared for this notable change in 2026 so they can:

• Identify employees who meet the required income threshold and the year in which the employee is eligible for Roth catch-up contributions (the year following the year the employee earned $145,000 or more in FICA wages).
• Support Roth catch-up contributions, including deemed Roth catch-up if their plan document allows it.

Deemed Roth catch-up means the plan automatically treats catch-up contributions as Roth for eligible employees without requiring a separate Roth election from the participant. This simplifies administration and ensures compliance, but the payroll provider must support this functionality.

Roth sources not calculated in RMD

Beginning January 1, 2027, Roth sources will no longer be included in required minimum distribution (RMD) calculations. We have already completed our preparation for this change.

Saver’s match

In 2027, the current credit for retirement contributions will change to a federal matching contribution paid directly into retirement accounts. Ameritas is reviewing this provision pending additional guidance from the IRS.

Existing provisions supported by Ameritas for SECURE 2.0

While not a complete list, the below provisions and implementation dates are of particular interest to many of our business partners. For additional information or to learn more, contact us at 800-745-9995.

Required minimum distribution (RMD) age change

The age to start taking RMDs increased to 73 in 2023 and will increase further to 75 in 2033.

Roth treatment for employer contributions

Please note that Ameritas is not currently supporting the feature that allows employees to designate employer matching or non-elective contributions as Roth contributions. While recent regulatory changes permit employers to offer this option, these designated Roth contributions are immediately taxable to the employee and must be 100% vested when made.

As an alternative, both our Elite Advantage and Elite Unlimited programs offer Roth conversions for employer contributions. This approach allows participants to achieve similar tax treatment by converting eligible pre-tax contributions to Roth, providing flexibility and alignment with their long-term retirement planning goals.

Deferral rate timing for 457(b) governmental plans 

Governmental 457(b) plan participants may now change deferral rates at any time instead of only during the first of the month.

Self-certification for hardship withdrawals

Participants can self-certify the existence of a financial need without providing documentation such as medical bills. At Ameritas, we consider this process our default approach for hardship documentation.

Multiple employer plans and pooled employer plans for 403(b) plans 

403(b) plans may now establish MEPs or PEPs, which are currently available through Ameritas.

Increased force out rollover limit

As of January 1, 2024, the maximum limitation for mandatory distributions increased from $5,000 to $7,000.  Sponsors can implement this change by contacting Ameritas.

403(b) hardship withdrawals

Employees can self-certify that a hardship withdrawal is based upon an immediate and heavy financial need, applying to all sources in a 403(b) plan.

Mandatory automatic enrollment

As of January 1, 2025, all 401(k) and 403(b) plans newly established on or after December 29, 2022, require automatic enrollment at 3-10% with automatic escalation of 1% per year up to at least 10% (but no more than 15%). Exceptions supported by Ameritas include governmental plans and church plans. If your plan is administered by a third-party administrator, you should work with your TPA for outreach on this provision.

Increase in catch-up contribution limits

This provision, implemented January 2, 2025, allows individuals ages 60-63 to make catch-up contributions of the greater of $10,000 or 150% of the regular catch-up limit.

Long-term part-time employees

As of January 1, 2025, the requirement for part-time employees to participate has been reduced from three consecutive years with 500+ hours to two consecutive years starting with the 2021 plan year. If your plan is administered by a third-party administrator, you should work with your TPA for outreach on this provision.

Retroactive provisions

A few additional provisions have been applied retroactively under SECURE 2.0.

• Qualified disaster recovery distributions is an optional provision that allows up to $22,000 in “qualified disaster recovery distributions” without the 10% early withdrawal penalty.
• RMD surviving spouse elections is a required provision we support whenever a plan sponsor advises that a beneficiary meets the criteria.

At Ameritas, we’re committed to helping plan sponsors and participants navigate the SECURE Act 2.0 changes successfully. We’ll continue to provide updates as additional guidance becomes available and as we implement these provisions. For specific questions about how these changes affect plan sponsors and participants, please contact us at 800-745-9995.

Disclosures

This information is provided by Ameritas®, which is a marketing name for subsidiaries of Ameritas Mutual Holding Company. Subsidiaries include Ameritas Life Insurance Corp. in Lincoln, Nebraska and Ameritas Life Insurance Corp. of New York (licensed in New York) in White Plains, New York. Each company is solely responsible for its own financial condition and contractual obligations. For more information about Ameritas®, visit ameritas.com.

Representatives of Ameritas do not provide tax or legal advice.  Please consult your tax advisor or attorney regarding your situation. 

In today’s increasingly complex retirement plan environment, financial professionals are seeking investment options that deliver value, efficiency and fiduciary alignment. At Ameritas, we understand the critical role you play in guiding plan sponsors toward strategies that support participant outcomes and plan success.

To better support your efforts, Ameritas has enhanced its EliteAdvantage program by integrating Collective Investment Trusts. CITs are pooled investment vehicles designed exclusively for qualified retirement plans that typically offer institutional pricing, simplified compliance, and access to professionally managed, diversified portfolios.

This enhancement reflects our commitment to equipping financial professionals with innovative tools that help build stronger, more cost-effective retirement options for your clients.

A growing opportunity

According to independent investment research firm Morningstar, CITs have been gaining traction as a target-date investment vehicle, particularly in recent years. As target-date assets increased to about $3.8 trillion overall as of June 2024, CITs passed mutual funds with about $1.9 trillion, or 50.5%, of target-date assets. Meanwhile, mutual funds maintained about 49.5% of the target-date marketing share, down from 71% in 2015.

Why have CITs become so popular?

Flexibility and streamlined costs

Collective Investment Trusts pool money from investors to buy a variety of investments. CITs also offer a mix of active and passive strategies designed for investors who want to plan for a specific retirement date.

According to Brett Eisberg, director, product management, retirement plans at Ameritas, a critical benefit of CITs is that they enable stable value funds to be part of the overall mix of products in a portfolio, putting the stability of these funds to work to lower risk—and, in turn, costs.

“The inclusion of stable value investments has a beneficial impact to the overall expense and volatility profile of the funds,” he says. “Combine that savings with the lower administrative costs CITs generally offer, it helps make this vehicle an extremely attractive tool for investors.”

Adding CITs to the fund mix at Ameritas is particularly relevant given the growing popularity of stable value funds. According to the Stable Value Investment Association, nearly $853 billion is currently invested in stable value funds across all plan types (individually managed accounts, pooled funds, insurance general accounts and separate accounts), and approximately 75% of defined contribution plans offer a stable value fund option.

Customized retirement investment portfolios

Another key advantage of CITs is their ability to offer customized investment portfolios tailored to specific investor needs.

“Navigating retirement planning involves juggling a lot of risks,” Brett explains. “A target date fund series with a stable value option as an underlying investment can be a useful tool for managing these uncertainties.” Consider these four key risk areas where a target date fund series with this stable value option can make a difference:

Volatility risk: The stable value option within a target date fund (TDF) provides more consistent returns.

Market risk: TDFs aim to optimize growth potential in the early stages of an investor’s career and gradually adjust equity exposure to minimize the effects of market downturns as retirement approaches.

Longevity risk: With increasing life expectancy, TDFs are structured to follow a glide path that aims to ensure a steady income throughout retirement.

Behavioral risk: There is no need to manually adjust investment allocations, as a TDF is structured to automatically maintain an appropriate mix of assets based on the participant’s expected retirement date.

The inclusion of CITs is part of continuing efforts to provide a wide range of retirement wealth building opportunities at Ameritas. Recently, we expanded the options available in both our flagship personalized managed accounts retirement platforms to keep up with growing market demand.

A constant commitment to service

While every retirement plan opportunity is different, Ameritas remains committed to working with financial professionals to find the right option for your clients’ needs. Learn more about our retirement products and offerings.

Ameritas® is a marketing name for Ameritas Mutual Holding Company and its affiliated subsidiary companies, including Ameritas Life Insurance Corp. and Ameritas Life Insurance Corp. of New York. Securities and investment advisory services offered through affiliate Ameritas Investment Corp., member FINRA/SIPC.

Ameritas® does not provide tax or legal advice. Please consult your tax advisor or attorney regarding your situation.

The retirement planning landscape is evolving rapidly in 2025, driven by significant trends that are reshaping how individuals and employers approach retirement savings. According to the 2025 forecast released by the Institutional Retirement Income Council (IRIC), a non-profit think tank, these are a few of several key developments to watch.

A desire for hybrid solutions: Increasingly, participants are attracted to more personalized retirement income strategies that integrate their unique circumstances, risk profiles and retirement goals. As a result, hybrid managed accounts that combine elements of traditional managed accounts with other investment options like target-date funds, are becoming more popular.

An emphasis on secure and predictable income streams: Additionally, plan sponsors are adopting more in-plan retirement income solutions, such as annuity marketplaces and systematic withdrawal programs, to provide easy-to-understand, reliable and predictable sources of income for retirees.

A need for more education: As Generation X begins to turn 60, it’s clear that additional training is needed to help plan participants prepare for retirement. Many employers are also feeling greater responsibility to help employees with retirement preparedness and are looking to enhance their financial wellness programs to include education for pre-retirees.

As a result of these trends, personalized managed accounts are gaining momentum, offering tailored investment strategies that address individual needs. And Ameritas is well positioned to meet the needs of this changing marketplace.

How Ameritas is responding to the marketplace

According to Brett Eisberg, director, product management, retirement plans at Ameritas, managed accounts programs for retirement planning resolve many of the challenges faced by savers. “While we’ve offered managed accounts for several years, we have expanded the available options within our EliteAdvantage and EliteUnlimited retirement platforms to give financial professionals a wider array of choices, so they can better serve existing clients as well as start the retirement planning conversation with new prospects.”

Jay Killgore, regional vice president, retirement plans, agrees. “With managed accounts, employees and businesses know that their account managers are putting together a personal strategy for them. This strategy isn’t based solely on age, but also on current investments and savings, current salary, any sort of match from the employer, as well as an individual’s state of residence, current and long-term savings goals, and other dynamic elements that make their situation unique. The participant can feel good knowing that the options were selected for them and their future, and also know that should their life situation change, their retirement plan can change with them.”

Why are managed accounts such a powerful retirement planning solution?

In addition to providing access to professional portfolio management, personalized investment strategies, and a disciplined approach to planning, managed accounts allow investors to change their strategy over time as their needs and life circumstances change. The benefits of these accounts are easy to understand:

Professional portfolio management: Managed accounts are professionally managed by experienced portfolio managers who stay up-to-date with market trends and make informed investment decisions. This know-how helps investors align their portfolio with their retirement goals.

Personalized investment strategies: Managed accounts are designed to cater to each individual’s unique retirement goals and risk tolerance. They create investment strategies that are specifically tailored to meet their requirements.

Disciplined approach: Managed accounts follow a systematic investment process concentrating on long-term performance and risk management. This disciplined strategy assists investors in staying on track towards achieving their retirement goals.

Products and services for today—and tomorrow

Nationwide, managed account programs are gaining in popularity as a tool for financial professionals, who are incorporating personalized retirement solutions into their suite of offerings at an accelerated rate.

“The financial professionals we work with are experienced and sophisticated,” Brett says. “Now more than ever, they see the value of offering managed accounts for their business and individual clients. We’ve been working hard to expand our offerings to meet their needs.”

To learn more about the specific details of the Managed Account Programs offered in Ameritas EliteAdvantage and EliteUnlimited platforms, financial professionals should contact their regional vice presidents. Marketing and training materials will be available for these new offerings and team support for financial professionals interested in bringing these programs to their clients.

Ameritas acts as recordkeeper in a bundled or unbundled service offering for the retirement plan and managed accounts programs are managed by independent third-party investment advisers who are not affiliated with Ameritas or its subsidiaries.

For nonprofit organizations seeking to hire top talent, the ability to offer a suite of attractive benefits is critical in a tight labor market. Traditional 403(b) retirement plans have been available to nonprofits for some time; however, given their administrative requirements, they aren’t always a viable choice for nonprofits with limited resources. Now, Ameritas retirement plans is helping nonprofit organizations sponsoring ERISA 403(b) plans offer retirement plans with lower costs and administrative workload with its Ameritas 403(b) PEP program.

Pooled employer plans, or PEPs, allow multiple organizations of differing sizes and demographics to join a single retirement plan. Along with pooled purchasing power, a PEP can provide relief to nonprofits who are wary of the administrative burden and fiduciary liability that comes with offering their employees a retirement plan. This means that nonprofits who may not be able to compete with for-profit businesses on salary can still offer a top-notch retirement plan benefit—which could be a game changer for many institutions.

The Ameritas advantage

Although Ameritas is an early entrant into the ERISA 403(b) PEP market, we’re able to leverage our deep experience in 401(k) pooled employer plans tailored to the for-profit marketplace. “One of the provisions of the Secure 2.0 Act of 2022 was that 403(b) plans are now allowed to be part of PEPs,” explains Scott Holechek, vice president, institutional sales, retirement plans. “Because of our expertise in the pooled employer market, we knew we could be an asset to our financial professionals who were looking for opportunities to start the conversation about retirement plans with their nonprofit clients.”

Brett Eisberg, director, product management, agrees. “While we’re not the first entrant in the 403(b) PEP market, we’ve entered the field with a product that’s based on the same design as our very successful 401(k) PEP program,” he explains. “Our financial professionals who work with both for-profit and nonprofit organizations don’t need to learn an entirely new product. The 403(b) PEP looks and feels quite a bit like what they already know, so they can present it with confidence to a new market segment.”

The Ameritas 403(b) PEP is designed with additional features that nonprofits may find particularly attractive, such as a low-cost investment menu, managed account option and a fully fee-transparent NAV platform.

“Our goal is to help bring the powerful tools of this retirement program to nonprofits who otherwise may not be able to manage the requirements as easily on their own—including filing all the forms and performing an audit,” says Scott. “With the Ameritas 403(b) PEP, they can share the cost of the audit with other employers, and not have an auditor in their workplace for 30 to 40 hours a year. Employers can also outsource recordkeeping and fiduciary responsibilities to trusted third-party entities who are part of the PEP program, making it a turnkey experience. We’re starting to see more interest from the larger nonprofits to explore these tools, and we’re glad to support them in giving the best possible benefits to their employees.”

In addition to its new Ameritas 403(b) PEP, Ameritas also offers the Ameritas 401(k) PEP tailored to for-profit businesses. For more information about the Ameritas 403(b) PEP, visit Ameritas 403(b) Plan Pooled Employer Plan.

Given the proven position Ameritas retirement plans has in the multiple employer plan marketplace, we serve effectively in many unique channels. To deepen our commitment with professional employer organizations (PEOs), however, we knew we needed more than just top-notch products, technology and services. We needed a leader to create a personal connection to the marketplace. With the addition of Chris Miller as director of multiple employer plans for PEOs and associations, Ameritas retirement plans has a combination unmatched in the industry.

After a diverse and successful career in financial services, Chris was ready for a new opportunity—and challenge. When he connected with Jim Kais, executive vice president of retirement plans at Ameritas, they both could see the possibilities.

“I knew I wanted to work for a company that I felt epitomized retirement and understood retirement,” Chris explains. “I’ve been friends with Jim for a long time, and when he laid out his vision for what he was doing with retirement plans, I immediately wanted to be a part of it. With the people he’s hiring, the technology the company is continuing to invest in and the acquisitions we’ve made to give us the competitive edge, all the pieces are in place—they just needed the tip of the spear. And now, we can really focus on building and strengthening PEO relationships.”

Those relationships are particularly important in the PEO marketplace, according to Chris. “It’s a very niche channel, where everyone knows each other,” he explains. “The people you’re working with want to really connect with you—to shake your hand, talk with you and understand who you are. And they should. PEOs have a tremendous responsibility to their clients, and for us to be a solid partner, we have to meet all their needs.”

Ameritas is proud PEOs work with us for our vibrant operations and service model.

Establishing connections that matter in a fast-moving marketplace

Since coming on board in June 2023, Chris has hit the ground running, with a three-part plan to gear up quickly. “My number one priority, of course, was to dig in deep to understand the market and to learn what our Ameritas retirement plans and products offer and the key people in the marketplace. Second, we’re working with Shelia Reed, vice president of business engagement and strategy, and the retirement plans marketing team to create a terrific marketing campaign building on the combined brands that came together two years ago, Ameritas retirement plans and BlueStar Retirement Services. Finally, we remain committed to serving the PEO industry with actionable technology, engagement tools and access to cost-effective, easy-to-implement retirement programs, such as the pooled employer plan offering.”

Our job is to align the right retirement plan with the PEO’s benefit offering for greater retention and workplace satisfaction, and to facilitate a retirement savings journey for each of their customers and employees.

It’s an easy conversation, given how competitive the Ameritas retirement plan package is. “With our open architecture, no proprietary funds requirements and the technology—including an amazing mobile app with Spanish capabilities that is among the best in the business—we are very well positioned,” Chris says. “There’s so much we have to offer.”

Scott Holechek, second vice president of institutional sales for Ameritas retirement plans, agrees. “Technology is extremely important from a PEO perspective. PEOs process a great deal of data, and we work very hard to make it easy for them to provide that data. Once people hear we have 360-degree payroll integration with many payroll and HRIS vendors along with payroll validation, they begin to see the possibilities of how we can dramatically improve their experience.”

Ameritas goes one step further, Chris continues. “In addition to everything else, we are a mutual company. With so many providers in our space consolidating, and companies getting gobbled up by big firms, there’s a little bit of worry out there about what the future holds for some organizations. As a mutual company, that’s not a part of the conversation, and that really resonates with our clients and prospects. They know that if they join Ameritas today, they’ll be with us long term. That’s incredibly important. Because for PEOs to make a change, we not only have to match up to what they currently have in terms of products, we then need to go the extra distance with our service and our people. They have to know we’re going to be there, today and tomorrow. And we will.”

The future has never been brighter

For Jim Kais, bringing Chris on board was an easy decision. “With his significant experience across the retirement industry and a long track record of outsized success growing distribution for top retirement plan firms, Chris is an outstanding addition to our team,” Jim says. “He brings a strong ability to energize markets, create solutions and drive relationships that are meaningful across the ecosystem.”

Fortunately, the decision to return to the retirement plans market and join Ameritas retirement plans also came easily for Chris. “I enjoy sales—getting out, meeting people, being a part of the decision-making process. But working in this space is special. After all, everyone needs to retire—and everyone’s definition of retirement is different. But whatever that definition is—whether it’s golf or taking care of your mom and dad or pursuing a new passion, whatever it is—if I can help out in some way and the company that I’m with can ultimately help those people get to a dignified retirement…that’s what matters. Helping people achieve a dream is probably the best feeling in the world.”

Interested in working with Ameritas? Learn more about growing your retirement plans business with us.

PEPs can be a great solution for many small businesses, giving them the opportunity to attract and retain top employee talent while reducing their in-house costs, limiting their fiduciary responsibility, and providing access to potential tax credits. With such robust retirement program options now available for small businesses through the evolution of pooled employer plans, more of your clients may be considering offering retirement programs to their employees.

As you consider PEP providers, you’ll quickly see organizations sponsoring pooled employer plans are typically those with deep experience in this space—proven retirement plan leaders with pooled plans expertise. However, there are also organizations (such as gig economy employers, professional employer organizations, private equity firms and smaller financial services companies) who have benefited from sponsoring a PEP or offering a “white labeled” PEP product.

So that leaves you with a decision to make: Should you join an existing PEP, or do you and your firm establish your own?

Joining an existing PEP

With a focus on providing a simple, competitive program that reduces your client’s liability while offering attractive investment options for their employees, an established PEP offers a thoroughly vetted, turnkey solution for your clients. The pros of joining an existing PEP, such as The Ameritas PEP, include: 

• Ease of implementation: By choosing to join an existing PEP, employers can move more quickly into the implementation stage of their retirement program. Without the need to navigate complex legal and regulatory requirements, your clients can focus on sharing this new benefit with their employees and promoting participation.
   
• Expert oversight and administration: Employers can feel secure that the established PEP’s experienced team stands behind the plan—from setting up competitive investment options, to offering a seamless website and mobile app experience, to featuring reliable customer service.
   
• Trust in a proven leader: PEPs shift most of the employer’s fiduciary responsibility to the pooled plan provider (PPP)—someone who has been in the business of offering retirement plans for many years, in some cases. With the peace of mind knowing that a proven expert is serving as the pooled plan provider, business owners can focus on running their businesses, rather than worrying about how to run their retirement plan.

Read more about the power of the pooled employer plan in this article by Jim Kais, executive vice president, retirement plans.

There are some restrictions that come with joining an existing PEP, of course, primarily regarding investment choices. The investment menu is pre-determined. You and your clients will not have the ability to choose the funds in a pre-established PEP. This can be a concern for some financial professionals who want to have more say in what funds are included in the lineup of their plans. 

“At Ameritas, we’ve worked hard to ensure that the Ameritas PEP offers the best combination of elements business owners are looking for in a robust, well-managed retirement program,” explains Scott Holechek, Ameritas institutional sales leader and pooled employer plan thought leader. “The Ameritas PEP offers economies of scale through increased purchasing power, significantly reduced fiduciary liability, an experienced team to serve the plan, and features such as payroll integration, a fully transactional website and mobile app, and automated enrollment assistance and financial wellness education through GoalWise^SM.”

Sponsoring a pooled employer plan

If your firm or a client is looking to establish a retirement vehicle to service individual employers that do not have a commonality or nexus, a white labeled PEP may be a solution. Establishing a PEP could provide multiple advantages, such as:

Ability to serve your clients more fully, by:

• Transferring fiduciary responsibility by shifting the role of the named fiduciary and the administrative fiduciary from the employer to the PPP.
• Being able to manage your clients’ complete financial portfolio—business assets as well as personal 401(k) assets.
• Outsourcing the investment management responsibilities to another plan partner.
• Streamlining retirement plan management and administration.
• Reducing administrative burden with a single plan for audit and reporting, eliminating the need for individual plan audits, Form 5500 and government filings.

Control and end-to-end customer service of the retirement plan process: As the architect of your own PEP, you can establish a branded process that allows you to select the professionals servicing your plans, and have a voice in building the investment menu for your clients.

With these advantages come potential concerns that should be addressed and/or vetted by your team as you set up the PEP:

• Complexity of setup: You will need to establish or partner with a firm to operate as the PPP. The roles of the named fiduciary, ERISA named plan administrator and the party responsible for all plan administrative duties are transferred from the adopting employers to the PPP. The PPP may delegate responsibilities to partner firms. The PPP would have to make an initial registration filing at least 30 days (but not more than 90 days) before “beginning operations” as a PPP. It should be noted that the DOL takes the position that a PPP begins operations when it begins public marketing of a PEP.
• Unclear regulations: As the marketplace continues to evolve, it’s incumbent on the PEP owner to track regulatory requirements. One key concern is that, by providing investment services to the plan while serving as the PPP, there is a potential for creating a prohibited transaction. This could result in heavy and increasing penalties if not corrected in a timely manner.
•  Business focus: Many small business owners are drawn to PEPs so that they can improve internal efficiencies and keep their focus on primary lines of business. You may need to determine if sponsoring a PEP is a viable avenue to business expansion, or if you will be able to serve more clients more effectively by working with an established PPP. 

Taking the next step with PEPs

The possibilities offered by the changes in the retirement plans marketplace and the increasing popularity of PEPs are exciting and worthy of exploration.

Ultimately, every firm is different, with unique considerations in how you help your clients prepare for the future. That’s why at Ameritas, we offer multiple options for financial professionals to help meet their client’s needs, either by helping establish a new white labeled PEP or providing them access to the existing Ameritas PEP.

With an A+ Standard & Poor’s rating and an A AM Best rating for insurer financial strength¹, we’ve stood as a financial services leader for more than 130 years—and have served the retirement plan marketplace for more than 60 years. Offering $15.3 billion in retirement assets across more than 8,500 retirement plans, a state-of-the-art technical platform and dedicated service, we welcome the opportunity to share how we’re meeting the needs of today’s retirement market with our PEP solutions.  Learn more about Ameritas retirement plans.

Now more than ever, small- and medium-sized businesses are actively exploring the idea of offering retirement plans to their employees. Well-managed, competitive 401(k) programs can help businesses attract and retain top talent, secure potentially significant tax breaks and deductions and satisfy current or impending state retirement plan mandates with maximum flexibility. Even better, recent legislation has made the process of setting up and managing a 401(k) program dramatically easier for businesses—putting the benefits of a retirement plan in reach.

“One major barrier that has kept business owners from sponsoring a retirement plan is the amount of administration required,” explains Scott Holechek, Ameritas institutional sales leader and pooled retirement plan thought leader. “Business owners are busy running and growing their business and often do not have the time or expertise to manage the day-to-day administration of a 401(k) plan. Now, with pooled retirement plans, especially MEPS and PEPs, the responsibility for running the 401(k) plan drops down to less than 5% of the usual tasks to administer the plan—and only a few hours a year.”

The retirement plan marketplace has undergone a rapid and business-friendly evolution in the past few years. Ameritas has been at the forefront of this shift, first in working with financial professionals to bring multiple employer plans to their clients, and now leading the industry in pooled employer plans.

MEPs gain momentum

Multiple Employer Plans (MEPS) have been available for many years. MEPs are sponsored by a third party, known as the MEP Sponsor. That sponsor, typically an association or professional employer organization (PEO), takes on the responsibility and liability for running the plan.

MEPs are ideal for businesses for many reasons—they’re easy for a business to administer, they’re compliant with DOL and IRS regulations, they’re competitive and they’re affiliated with well-established partners and administrators. Their key requirement, however, is that all employers participating in the MEP have a common nexus of interest. For example, businesses within the same industry (food service, construction, etc.), geographic area or who are affiliated through an association or PEO can join a MEP that allows them to design a plan with unique benefits for their employees.

Employers, however, have often been wary of the “one bad apple rule” that could jeopardize the entire MEP. Under this rule, the entire MEP could be disqualified based on the actions of only one employer that participated in the plan. One major change in the MEP marketplace occurred with the enactment of the Setting Every Community Up for Retirement Enhancement (SECURE) Act in 2019, often referred to as SECURE 1.0. This act provided significant relief to the “one bad apple rule” and renewed interest in multiple employer plans.

PEPs expand access

SECURE 1.0 also created a new type of pooled plan—the Pooled Employer Plan (PEP). Through a PEP, unrelated employers can participate in a pooled retirement plan without having to meet the common nexus requirement that had been the standard for multiple employer plans.

PEPs offer several of the same benefits as MEPs. In addition, they are even easier for businesses to participate in because a separate pooled plan provider takes on the primary administration and fiduciary responsibility for the overall PEP, including oversight of the plan administration, compliance and investments. They also minimize fiduciary liability, since the PPP manages all entities associated with the PEP. With nearly 95% of administrative and fiduciary tasks outsourced, participating employers can reassign their people to tasks more directly related to their business.

Perhaps most importantly, PEPs allow businesses of all sizes to pool their resources to ensure their employees have access to a competitive, well-run 401(k) plan. PEPs, such as the Ameritas PEP, can be customized in many ways to meet the company’s needs. They offer flexibility with items like eligibility and enrollment, employer contribution formulas, safe harbor allocations, vesting schedules and more.

“Small business owners today need a plan that’s easy to administer, that minimizes fiduciary liability and is fully compliant, and that frees up internal resources,” explains Nicholas Betlow, business development manager. “At Ameritas, we can offer all these benefits within a well-regarded, cost-competitive 401(k) that offers real value to plan participants.”

Quick overview: What’s the difference between MEPs and PEPS?

What does it mean to PEP your MEP?

If your clients already have a multiple employer plan that they’re interested in expanding to a broader group of employers, they have the option to “PEP their MEP,” or convert their plan to this newer retirement plan type. PEPs may be a more attractive option for associations or PEOs as this plan type expands the universe of potential employers that can join the PEP. A pooled plan provider can help a business convert their MEP to a PEP, while complying with all applicable laws.

Getting started

At Ameritas, we’ve been a leader in the retirement plan marketplace for over 60 years, servicing more than 8,500 plans and 269,000 participants (as of January 1, 2023). As a result, we have the expertise, personnel and experience to help you—and your clients—succeed in the marketplace.

“With a full suite of retirement plan options and deep experience in the market, we can help you provide your clients with a retirement plan solution that’s right for them,” explains Holechek. “Whether you choose to participate in a MEP or a PEP, that plan will help your clients minimize their fiduciary responsibility and be easy to administer, cost competitive and fully compliant.”

We look forward to providing you our best-in-class service and solutions as you expand your practice with MEPs and PEPs. Connect with us today to learn more.

Businesses are generally concerned with three things when it comes to sponsoring a retirement plan: cost, fiduciary risk and administrative burden. At Ameritas, we’re working hard to remove those barriers, bringing high quality retirement plan benefits to a growing number of employers: main street businesses, nonprofits, governmental groups and community organizations.

We couldn’t do it without our field partners – financial professionals. We recognize that our relationship with our advisors is one of our greatest assets. As such, we are committed to recognizing the effort you put forth to ensure retirement readiness and supporting you in this endeavor over the long-term. It’s our relationship with you that helps make us a main street market leader. You can count on our experience and know-how with offerings like the Ameritas Pooled Employer Plan. We are here to make the road to retirement easier, for both you and your clients.

The Ameritas PEP

This recent addition to our robust pooled retirement plan capabilities like multiple employer plans, or MEPs, makes us even more versatile. We have a website that provides details about the Ameritas PEP and tools you can use with your clients.