Employee Fiduciary Urges DOL to Reject PEP Safe Harbor in Favor of a Higher-Standard, Lower-Cost Path for Small Businesses

MOBILE, Ala., Sept. 15, 2025 /PRNewswire/ -- Employee Fiduciary, LLC, a leading provider of small business 401(k) plans, has formally submitted a comment letter to the U.S. Department of Labor (DOL) urging the agency not to create a regulatory safe harbor that nudges small employers into Pooled Employer Plans (PEPs). Instead, the firm recommends a single-employer 401(k) safe harbor built on verifiable low-cost and transparency standards that any small business can meet without ceding control of plan design.

The letter responds to EBSA's "Pooled Employer Plans: Big Plans for Small Businesses" Request for Information (RIN 1210-AC10), now open on Regulations.gov.

"PEPs are marketed on two headline promises—lower fees and less employer liability. In practice, those claims distract from the real goal: control. Providers can abuse this control by standardizing terms, steering investment menus, and embedding revenue streams," said Eric C. Droblyen, CPC, QPA, CEO and Owner of Employee Fiduciary. "Small employers don't need a pooled plan to get fairness and scale—they need clear, auditable rules that lock in low costs and eliminate conflicts. Our proposal does that."

Employee Fiduciary's comment letter highlights several risks of PEPs:

• Layered and asset-based fees that rise automatically with plan growth.
• Standardized plan provisions that reduce flexibility in matching formulas, eligibility, and vesting.
• Conflicted investment menus where providers promote proprietary or high-cost products.
• Difficult exit processes that make it harder for employers to leave a pooled arrangement.

These concerns are reinforced by findings from the U.S. Government Accountability Office (GAO). GAO has documented how revenue sharing and variable annuity "wrap" charges can obscure the true cost of 401(k) plans, making them more expensive and harder for participants to understand. In its 2024 review of fee disclosure, GAO concluded that transparency, not pooling, has been the primary driver of lower 401(k) costs over the last decade.

Employee Fiduciary believes a safe harbor for single-employer plans, built on low-cost index funds, flat per-participant fees, and clear fee disclosures, would better meet the DOL's goal of expanding high-quality retirement plan access for small businesses.

To read a copy of the comment letter and gain further insight into Employee Fiduciary's perspective on PEPs, visit https://www.employeefiduciary.com/blog/pooled-employer-401k-plans-alternative.

About Employee Fiduciary

Employee Fiduciary, LLC, founded in 2004 and headquartered in Mobile, AL, is a leading provider of low-cost 401(k) plans for small to medium-sized businesses. The company's founding principles are transparent fees, personal care, and expert plan design. The company serves over 5,000 small businesses and approximately 145,000 participants nationwide.

For more information about Employee Fiduciary, visit www.employeefiduciary.com, and follow us on Facebook, Instagram, X (formerly Twitter), and LinkedIn.

For Additional Information
Victoria Power
Employee Fiduciary
401082@email4pr.com
(251) 254-9634

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SOURCE Employee Fiduciary