Choosing a retirement plan can be challenging. While PEPs may seem appealing due to their promise of lower fees and less administrative work, they have significant drawbacks compared to 401(k) plans.
PEPs
Subsidization Issues:
The underlying fees of a PEP rely on large plans subsidizing small ones, burdening large plans and making small plans dependent on the large plan participation.
Inefficiencies and Time-Consuming Tasks:
Clients often struggle to understand who is responsible for various aspects of the plan and struggle to find the right contacts or documents, leading to frustration and misused time.
Lack of Customization:
Individual employers sacrifice design flexibility and the ability to tailor the plan to their specific needs.
Over-Hyped Cost Savings:
The initial allure of PEPs centers around cost savings. After setup employers find that these savings are not realized due to the subsidization requirements inherent to PEPs.
401(k)s
Enhanced Employer Branding:
Employers who sponsor their own 401(k) plan enhance their reputation and credibility with recruiting and retaining employees.
Direct Service and Support
At Trinity, our 401(k) clients receive a dedicated Relationship Manager as their point of contact, offering personalized support and streamlining administrative processes.
Customization and Control:
Employers can tailor features such as matching contributions and investment options to meet retirement plan goals.
Clear Cost Structure:
The true cost of an employer sponsored 401(k) plan is more transparent and not burdened or reliant on the participation and subsidizing of other companies.
While PEPs may initially seem attractive, their limitations and over-hyped cost savings make them less favorable compared to 401(k) plans.
Contact Trinity Pension Consultants to request a custom 401(k) Proposal.
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Trinity Pension Consultants