Transamerica Signs On as Recordkeeper for Smart’s ‘Choice PEP’

Transamerica Corp. will provide recordkeeping and 3(16) plan administration services to a new pooled employer 401(k) retirement plan solution from Smart Retirement Solutions Inc., called “Choice PEP,” the company announced Tuesday.  

Smart’s new PEP offers a “streamlined an efficient workplace 401(k) retirement solution for employers looking to reduce their administrative burden,” according to a press release.  

““We are honored to work with Smart as the recordkeeper for the Choice PEP,” said Phil Eckman, president of workplace solutions at Transamerica, in a statement. “This collaboration underscores our commitment to providing employers with cost-efficient retirement plan solutions that simplify plan administration and deliver long-term value to their employees.” 

A PEP allows multiple, unrelated employers to participate in a single retirement plan, and as the pooled plan provider, Smart—a global savings and investments technology provider—will act as a plan sponsor and provide support to employers who do not have expertise in fiduciary duties.  

The plan offers shared fiduciary responsibility for an adopting employer and potential efficiencies around investment, administration and audit costs, according to the press release. 

Employers who join the Choice PEP are responsible for the decision to participate, timely payroll submission and cooperation with service providers. According to Smart, Choice PEP uses one combined Form 5500, one consolidated audit across all employers and offers a menu of flexible 3(38) investment managers from which to pick a fund lineup. 

The Choice PEP is open to all employers, and there is no limit as to how many can join the PEP. 

A Smart spokesperson said multiple employers have expressed interested and submitted paperwork to investigate the possibility of joining the recently launched PEP. Employers can join the plan now, but if the plan is a conversion from another recordkeeper, the spokesperson said it could take six weeks or more due to transfer time. However, if the company is a startup, the process can be quicker. 

Transamerica provides a “comprehensive package” of recordkeeping services for plan sponsors, whether it be full-service or with the use of a third –party administrator selected by the plan sponsor, according to its website.  

The company first joined the PEP-alternative market in January 2022 when it announced the availability of a new packaged solutions for small companies seeking to start a new workplace retirement plan for their employee, the Transamerica Advantage Solution. 

Transamerica’s announcement comes at a time where PEPs are becoming more popular as a retirement solution, particularly for small employers that are hesitant about offering their own 401(k) plans because of the expense or the fiduciary risk that comes along with such plans. 

PEPs were first established by the Setting Every Community up for Retirement Enhancement Act of 2019 and introduced to the market in 2021. The goal was to encourage employers that didn’t provide retirement plans to offer one.  

Under the SECURE 2.0 Act of 2022, certain 403(b) plans can now operate as PEPs as well.