Difference Between MEPs, PEPs, GoPs and SMS: GRPAA Conference

pooled plans
Haines, Alaska. Image credit: © Reinhardt | Dreamstime.com

For better or worse, pooled plans are all the rage, a solution to the vexing problem of cost-effective retirement plan coverage for employees of smaller organizations.

Yet, the different iterations and offerings can quickly become overwhelming.

For advisors who are confused about the ins and outs, pluses, and minuses of the MEP/PEP/GOP/SMS alphabet soup, GRPAA has you covered. An in-depth discussion of the three-letter acronyms took place at the GRP Advisor Alliance annual conference in Haines, Alaska, on Saturday, and panelists compared and contrasted each.

Expert speakers included Kim Cochrane with Raffa Retirement Services, Trent Bryson with the Trent Bryson Agency, Keith Gredys with Kidder Advisers, Stephen Daigle with Bidmoni, and Jason Roberts with Pension Resource Institute and Retirement Law Group.

Pooled Employer Plans (PEP)

  • The most scalable of the group
  • Preferred plan advisor (3P) advantages
  • Is the “new” open MEP
  • An advisor can set compensation levels on a “per plan” basis
  • The 3(16) is a named fiduciary
  • The plan sponsor is the pooled plan provider

Multiple Employer Plans (MEP)

  • Not as scalable as a PEP
  • Fiduciary responsibility can be offloaded
  • An advisor can set compensation levels on a “per plan” basis
  • The MEP can be branded

Group of Plans (GoP)

  • Training wheels for PEPs
  • The advisor can set the compensation level where they want, plan to plan
  • Good for nonprofits
  • Can be a 401k or 403b
  • They will be offered starting in 2022
  • Offers economies of scale
  • Suitable for those who don’t want a PEP but want the scale they offer
  • One audit (hopefully)
  • They are cheap (called PEP busters

Small Market Solutions (SMS)/Individual Plans

  • Once known as an aggregator solution to address small plans
  • Providers are increasingly creative
  • Individual plans are not going away
  • Higher customization
  • Include cash balance plans, ESOPs, cross-testing, etc.
John Sullivan
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With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.

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