SECURE Act 2.0 & PEO Partnerships:

Posthauer, Amber   0:05
We're going to get started in about 60 seconds to allow a chance for everyone to get connected. We'll get started shortly.
Hello and welcome everyone. Thank you for joining us today for our web webinar Secure Act 2.0 and PEO Partnerships What Small Businesses Need to Know. My name is Amber Postar. I'm the Senior Training Coordinator at NFP and I'll get us started for today's session.
As background, NFP and Aon Company is an organization that helps address significant risk, workforce, wealth management and retirement challenges. We are more than 7700 colleagues in the US, Puerto Rico, Canada, UK and Ireland, serving a diversity of clients, industries and communities.
Our global capabilities, specialized expertise, and customized solutions span property and casualty insurance, benefits, wealth management, and retirement plan advisory. Before we get started, I want to share a few quick housekeeping notes. This webinar is being recorded and we'll send you the recording and slides within the next couple of days.
If you have any questions, feel free to submit them at any time using the Q&A box box on your screen. We'll answer as many as possible during our dedicated Q&A time at the end of the presentation. Today we're going to explore how Secure Act 2.0 has brought changes to retirement planning for small businesses and by the end of the session you'll get a better understanding of key.
SECURE Act provisions, the pros and cons of different PEO retirement plan models and finally how to evaluate if your current setup aligns with your long term goals. Now to answer these questions and more, we'll have three excellent panelists joining us today. They are Cameron Jones, Senior Vice President of National and National Growth Leader of.
Health and Retirement at NFP, Brad Beausoleil, Vice President at NFP, and Alexa Champy, PEOCOE Sales Leader at NFP. If each of you could give a little bit more of your background and expertise as we go, that would be great. Now let's get started.
I'm pleased to introduce our first speaker, Alexa, who'll give us an overview of what a PEO is to level set this conversation. Alexa, the floor is yours.

Ciampi, Alexa   2:42
Thank you, Amber, and I'm so glad to be here today. Thanks everyone for joining. As Amber mentioned, my name is Alexa Champy. I lead our sales efforts within NFP's PEO Center of Excellence. I've been doing Benefits for the last 1415 years and within NFP for the last eight years and I'm.
I'm really glad to be here today and sharing a little bit more about PEO and then we'll tie it all into the Secure Act 2.0 later with Cameron and Brad. But as a baseline here to just give an overview on what is a professional employment organization.
So it's our turnkey solution, right? Think payroll benefits, HR, risk management, technology, global capabilities and compliance all under one roof. They provide a comprehensive Services, through what's called a co-employment relationship and it's all under one technology platform, which is great.
They pull multiple small businesses under one umbrella. So this creates scale driven efficiencies because you're buying into a large group health plan, large group workers compensation plan and it really can support some cost saving strategies when you're looking for solutions for your small and mid-size organization.
So from a payroll perspective, you can streamline streamline payroll with accurate processing and timely tax filings. From a Benefits perspective, you have access to competitive Fortune 500 benefits, including health, retirement plans, HR and compliance. You can ensure compliance with laws local and federal.
Manage employee relations and receive expert HR support and navigate complex regulations. From a risk management perspective, you can mitigate risks related to employment practices and workplace safety. And then on the HR administration, you're outsourcing some of those HR tasks, enabling focus on.
Strategic business growth and then that technology allows you seamless benefits, enrollment and HR management. And from a global capabilities perspective, there's some resources there on a on a global level. So if you have the need, there's partners out there that can serve on a global basis.
Why employers consider a professional employer organization By taking on administrative and HR related tasks as well as providing regulatory compliance assistance, PEOS help businesses improve productivity, increase profitability and focus on their core mission.
The PEO takes on many of the employee-related employer responsibilities while the employer continues to manage and run the business. So there's no they don't take complete control over your organization. They just take on that administrative burden so that you can focus on some of the revenue generating parts of the business.
You have all hiring and firing decision-making still there. It's just the process in which you do that. They're ensuring compliance, which can support you from an administrative perspective.
From a solution perspective, there's many different ways you can partner with the PEO. It's certainly not a one-size-fits-all solution, so there's different ways you can partner with them. A lot of flexible models that exist out there there within a PEO, you can have your Benefits carved into it.
Have the Benefits carved out as well. And an example of that would be if you love the technology aspect of it, the administration, the HR support from a PEO that a PEO provides you with. But say you really love your medical Benefits the way they are today. Maybe you have a specific carrier that you like you have.
Really great rates in the open market. You can maintain that same arrangement, but still have the Benefits of a PEO from like a HR support and compliance perspective. You just keep the Benefits carved out of it and NFP can certainly support you on a broker perspective there. There's no two PEOs.
Like right at the surface, they all may look the same and provide at its core those same pillars of support, right? Payroll benefits, HR compliance. But how they deliver those Services, is quite different and NFP we'll get into a little later can support you in finding the right solution for your organization.
That's aligned with with your needs as well. There's also administrative Services, only, which essentially take care of your payroll, the HR compliance, and then the technology piece of it. Finding what solution makes the most sense for you starts with a conversation and then we can determine which path we can go down.
Yeah.
So there's industry focused solutions. We have different PE OS that NFP partners with that can deliver tailored solutions that fit each and every industry. As I mentioned before, there's no two PE OS that are the same and every PEO has a different.
You know, different capabilities and how they can serve each one of these industries. Again, if you're interested in exploring PEO, it starts with a conversation and we can find the right partner for you based off of your specific industry and the needs, and we'll find the one that can serve you best.
It's a growing industry. There's over 200,000 small and mid-sized businesses that utilize PEO Services, today and the the typical cost savings through a PEO, there's average of 27% ROI and cost savings alone, business performance impact.
Small businesses are tending to grow faster than those without, and it's because they aren't bogged by bogged Down, by the administration. By partnering with the PEO, organizations can focus on other parts of the business, which allows them to grow faster. And then we're seeing higher retention and satisfaction for groups that.
Are in a PEO. So that's, you know, a great, a great solution there.
And now I'm going to pass it back to Brad and Cameron on tying this back to the Secure Act 2.0. Thank you.

Jones, Kameron   9:10
Thank you, Lexa, for the background on PE OS and nice to meet you all. I'm Cameron Jones, the National Growth Leader for NFP's Wealth and Retirement Division. Our team really Services, clients from, you know, one employee all the way as large as 100,000 employees with retirement plans of all different shapes and sizes with different provisions. So many PE OS actually hire us to.
Help manage their retirement plan they offer to their adopting employer clients, such as those of you on this webinar and many small employers help and get, you know, engage us to decide whether to join a PE OS retirement plan or maybe start their own. So really here to give you a nice consultative overview of some of the things to consider as a small business owner and how to best offer retirement.
Benefit to your employees and some of the key provisions. So alongside me is going to be presenting Brad Boussele. Brad, do you want to go ahead and give your background talking about how you had our administrative practice?

Beausoleil, Brad   10:01
Yeah. So I I had our the defined contribution practice for our third party administration team, which means we do like a lot of the compliance testing that goes into a retirement plan and.
And you know, so, so that's our background and and that's you know I'm really going to be able to get into some of these secure 2.0 provisions as well and we really work great from a plan design aspect or if you're looking to put additional contributions into your plan.
Our additional services.

Jones, Kameron   10:32
So quick high level for those of you who maybe don't have much experience with retirement plans. When you do offer a retirement plan to your employees, it's governed by a couple of different bodies. The 1st is the Department of Labor, specifically the EBSA division of the Department of Labor, which is making sure you're fulfilling your responsibilities in managing your retirement plan, which are fiduciary nature, meaning it's your employees money going to these plans.
You're held to a high standard to make sure you're following really best practices when making any decision on behalf of your employees. There's a law that was implemented in 1974 called ERISA, the Employee Retirement Income Security Act. This is basically the playbook of what to do and what not to do when implementing your retirement plan. So as you see these regulations like.
Cure 2.0. There's many amendments being added to a risk as you go. That's enhancing. I'd say the rules of retirement plan to make it better, to create better retirement outcomes for employees, to make it easier to sponsor retirement plans and just to to really fix a lot of the administrative quirks that might come up.
Because the other party that governs this is the IRS, because there's tax benefits to the CRS to make sure the plan changes qualified status. So really here, you know, the Secure Act was the first, you know, I'd say about a provision under this title that added a lot of benefits to those folks who are sponsoring return plans and for your employees in these plans. Secure Act 2.0 was kind of a.
Follow-up bill that went in and add even more provisions to enhance retirement outcomes for employees. So Brad, do you want to talk about some of those key bullet points that Secure Active One touched on that are going to impact any small businesses sponsoring retirement plan?

Beausoleil, Brad   11:59
Yeah, the first one there is enhanced start-up tax credits for 401G plans, which I I think is is a is a huge incentive for anyone considering starting one up. There's credits for up to $3000 per year. That is a tax credit and not a deduction.
Depending on how many non highly compensated employees that you have participating in the plan. And then there's also some additional contribution credits as well based on the who's receiving a match or an employer contribution.
So a lot of that is geared toward under 50 employer employee companies and plans, but then it also phases out from 50 to 100 employees. Then there's some other provisions here too, mandatory automatic enrollment for new plans starting in 2025.
So before that, that was always that was an optional provision, but starting in 2025 now if you start a new plan, you need to have automatic enrollment in there started.

Jones, Kameron   12:59
An automatic enrollment for the folks who are newer to plans is basically a participant has is going to get a notice saying and if you do nothing we're going to take X percentage out of your paycheck to start saving their term plan unless you opt out. So it's more of an opt out design where now that is required for any new plans being implemented. You have to have that opt out provision and what we've seen is.
When you have automatic enrollment, you get really high participation numbers because most people are ruled by inertia and if they don't have to take action, they're just going to go with the defaulted, which creates much better retirement outcomes.

Beausoleil, Brad   13:28
Yeah, and a lot of this secure and secure 2.0 act are are is in how can we increase participation amongst employees and help them save for retirement. Another one here, Roth catch-up contribution changes. So anyone over age 50 typically can put in additional funds as they're getting closer to retirement age.
Starting now for 1/1/26 that is going to have to be done in Roth. So just looking to make sure your plan is designed accordingly and just really making sure there's a good bridge between your payroll and and your provider that's.
Uh, wherever you're at, your 401K plan is located. Um, just so that's feeding with your Yep.

Jones, Kameron   14:07
And so for um.
And so for so for Roth, Roth is basically after tax contributions that the earnings on them are tax-free and pull the money out where a traditional contribution is a pre-tax contribution that grows tax deferred and it's taxed when you pulled out. So for your high earners, which is a people making approximately $150,000 a year that that number gets reset every year depending on you know cost of living adjusted.
The investments that the IRS sets, those folks, you know, really it's actually 145,000 is the limit for where they're going to be taxed at Roth. That might be new for anybody who's sponsoring a plan today for your high earners that want to do a pre-tax catch up, which impacts their personal financial planning, kind of their tax planning. So really important for you to know.
Starting in 2026, that feature will be in there for for your high earners and and so that's where you want to get ahead of that. Talk to your administrative re-retirement plan to see if there's other kind of pre-tax mechanisms you can look at for the high earners.

Beausoleil, Brad   15:02
And there's a student loan match and then emergency savings account options. I mean that big that first one is a bigger piece where where you know you can have an optional provision now in your plan where you can take the student loan payments that employees or participants in the plan are putting in there and then giving.
The match as if it were deposited as a 401K contribution, just in in knowing that a lot of, you know, a lot of employees are struggling with student loan debt and how can we still get them to start trying to save a retirement at the same time. So you can check with your provider if that's.
You know possible with the technology in place or just to see that that's something of interest to you.
And then the last one we have is increased flexibility and accessibility for plan design. There's there's other provisions that are in here as well, just like part-time employee eligibility. There's something called a long term part-time employee provision that was brought in for secure one, the first secure app.
But now if anyone works 500 hours or more for two consecutive years, they they need to be able to put in 401K into the plan. So that's just another additional, you know, complexity added to plans where you're able, you're needing to track that.
But also it's helping, you know, employees that may have not qualified for a right to retirement plan to be able to contribute in the future.

Jones, Kameron   16:33
So for so for anybody really looking to start their first retirement plan, the first thing to know is that when you're putting a plan in place, you have things that the law is going to mandate you to do within the guidelines of the rules being outlined. And this is, for example, for people making over 145,000, catch up has to be.
You know, Roth on a go forward basis, that's not an option. But there's other things that are optional, like if you give employer dollars to people, that's always an option. If you want to do a match or just a profit sharing kind of contribution, those are those are optionals. There's limits in which you can put them in. But it's important when you're first starting a plan is to say what do you want your plan to look like? Like who do you want to be eligible? When do you want them to be?
Eligible within the guidelines. Do you want to give money to them? Do you not? These a lot of these things are optional. And then once you get an idea of like what your plan design looks like and and oftentimes consultants like NFP can help you with that discussion. Then you want to see what kind of retirement plan can support that because when you're joining, let's say a PEOS retirement plan.
Some are designed to be very flexible on a plan design perspective, other times to create lower costs, they might be more restrictive. And so just understand, while you can the law might allow you to have certain plan designs, you then want to see which vendors or which types of plans will then support those plan designs. So while Secure Act 2.0 is phenomenal.
And I think it gives a lot of incentives to put your first plan in place. Then understanding where you want that plan to live is the next conversation. And a lot of what will impact who can actually administer your plan is going to be what do you want that plan to look like? Do you want it to be where people save their own money and that's it? There's no employer dollars, very simple in the box. Or do you want to add maybe?
Emloyer dollars are different kind of features there.
So to the next slide, the other giant driver of new plans, understand the government's priority is to expand coverage, meaning they want more employers offering retirement plans so employees across America can save for retirement to supplement any kind of government sponsored programs like Social Security. So and really frankly be the main.
Driver of people's assets outside Social Security. So many states are now taking into their hands and saying you either have to in certain states offer a retirement plan. It used to be in the vast majority of states are still you don't have to offer retirement plan as an employee benefit offering to your employees. That's an option. But many states are saying you either have to offer your own plan and submit.
Prove to the state that you have a plan or the state has set up a plan to no cost to the employer where people can save more with with different rules than maybe the 401K plans you might set up if you were to sponsor your own plan. Brad, do you want to talk a little bit about kind of what some of those state rules are? And each state's a little nuanced different. So this is an example, but it's it's pretty.
Pretty close, you know, state-by-state and kind of what the features of a state-run retirement program would look like.

Beausoleil, Brad   19:16
Yeah, it's a typically it's just an auto enrollment until until like an auto IRA that's taken out of employees paychecks. It's done on a Roth basis. So it's your taxes are already paid and then when you do withdraw it from the plan, you know it's it's done in an after tax basis.
And it is in an auto roll, an auto enrollment feature which we just discussed in the prior slide. So employees can opt out of it, but by default you know they are putting into this state-run plan into the Roth IRA you you know.
The IT is an employee contribution only, so there's never really any employer contribution piece to it. And the limits are lower than you would see in a traditional 401K plan. So it's about $7000 per year that they can do. So there are there is no compliance testing, fewer fiduciary responsibilities.
As as we have here on the slide, um, it's pretty much we we're having a plan because we're legally required to have one. Um.

Jones, Kameron   20:18
And so and so these plans don't have any cost to you. They don't have any fiduciary liability to you, which is beneficial from an employer perspective, but they do come with much more limited ability for your employees to save at a $7000 cap. It has to be Roth to IRA. So you don't get to choose the investments, right. You don't get that any employer dollars. So if you want to add a match or kind of some sort of vesting schedule.
This isn't the right vehicle for that, but for folks that you know, want to, you know, really comply with the laws and just give people the ability to save some of their own money, a great option for you. We see this very popular with like grocery stores, restaurants, right? Maybe with large populations of seasonal workforces, maybe a plan like this actually could make a little bit more sense.
Than bearing the expense of offering, you know, your own retirement plan. So nice that some of the states have made that an option. But again, this is approximately 14 states now have a mandate you'll see there and that could be growing to the high teens, I'd say, but it's not a majority of states across the United States at this at this point in time.
So now an overview of really, if you are looking at joining a PEO, there's really three types of retirement plans. If you were to sponsor your own plan and not do the state mandated plan that you'd be looking at, and it's going to be a closed multiple employer plan, which is the old traditional one that's been the most popular with PEOS for years.
There's going to be what's called a pooled employer plan, which Secure Act, the first Secure Act allowed plant sponsors to put in place and we'll explain the differences there similarities, but some differences. And then the third is what we call a single employer plan, which would be you starting your own retirement plan, your own 401K plan, or maybe if you're non-profit, a 403B plan.
And maybe even some supplemental plans as well. And and so we'll really talk through the different shapes and the different rules of how these plans operate. So the first is the closed multiple employer plan. This is a plan that's been around before SECURE Act, but it allowed for really a pooling of assets across a lot of small employers putting their assets all into one retirement.
Plan, but the law required some sort of affiliation of those employers to be able to do this. You couldn't just have 10 random companies in 10 different industries pulling their assets together. It had to be all doctors groups or all some sort of what they called Nexus. The PEO solves for the Nexus because if you join the Co employment part of the PEO, so not the administer.
Services only, but the Co employment PEO, you now have a Nexus with all other customers of that Co employment PEO, right? And so now that PEO is going to sponsor closed multiple employer plan where instead of you offering one plan with 10 employees and let's say 500,000 of assets.
This is now going to be a plan with thousands of employees all participating in potentially billions of dollars of assets because it's such a large pool of assets together, which allows them to drive down the cost of record keeping these plans of administering these plans of the especially the investment cost.
Of the investments being offered in these get driven down because of the scale and how many assets are in these things. And so it's a nice form K to join to ideally get lower cost than what you could get on your own, especially if you're a smaller employee, think less than 100 employees. Oftentimes the math can work out where what sponsoring plan on your own would be more expensive than joining.
One of these plans, the other key benefits are really the fiduciary to the plan is actually the PEO as they're the sponsor. So if you start your own plan, you have to be a fiduciary and you have to basically show your work. You have to show your monitoring investments in the plan, negotiating fees on behalf of your employees, right? And really keep a paper trail, ideally hire an advisor.
To work to help you fulfill these responsibilities. If you join a closed multiple employer plan, you're really not having to take on any of those responsibilities on as well as you don't have to have an audit if you exceed 100 employees or if you had your own plan over 100 employees, you're required to have a long form return plan audit, which is an additional expense for the plan.
In this closed map world, the plan has one audit for the entire plan. So you're not really bearing the cost of your own plan audit if you're over that threshold and the really the one and and these are these are 401K plans. So you have the higher limits instead of the state plan. So right now that limits 23,500.
Of what people can put it on their own and employer contributions. You can do a match, you can do profit sharing, you can add vesting schedules, right? You're going to have some ability to, you know, offer this plan in a design that makes sense for you in in the real beauty PEOS offers because they're your payroll system.
Is usually there's payroll automation. So the payroll and the contributions to the retirement plan happen without you or your own HR team having to really lift a finger. That's really being handled by the PEO staff to run the plan. So that's why it's so attractive, especially if you're small businesses that might not have big or any HR departments to offer this.
The limitations are really going to be you have to go with the provider that this PEO sponsors. So if you want to use any other kind of provider that you have experience with, maybe that's not the provider that's being sponsored by the PEO that you've joined for other reasons other than just the retirement plan decisions, that might be a limiting factor to consider.
To joining their plan. The other thing is some of these closed maps might have some plan design limitations. So if you want to get into, hey, I want to give a different amount of profit sharing to my highly compensated employees, that's a higher ratio than my non highly's. We call, you know, call that tiered allocation type design.
That might not be available with a lot of these closed maps because they're really built for efficiency and for just having a plan that's really low cost to offer to your employees.
So that's the old traditional closed multiple employer plan, but you have to be a part of the Co employment version of that PEO to be able to participate in this plan. The next plan, if you go to the next slide, Alexa, is very similar. These are newer plans that you're starting to see PEOS offer. Not all PEOS offer these yet.
As they've been around for 5-6 years, but it's almost identical to a multiple employer plan, except what Secure Act did with these pooled employer plans is 2 things is one, it said you can join these plans that are similar. It's a bunch of small companies joining a plan with one investment line up and can kind of, but you know that that it gets the economies of scale.
But you don't have to have a Nexus, meaning you don't have to have an affiliation. So a pet grooming organization can join the same plan as a law firm, right? They can all join the same plan. There doesn't have to be an affiliation and there doesn't have to be a Co employment agreement. So if you were to join the PEO for just the administrative services only function, which is becoming.
Very popular in the PEO space where people want the HR, they want the payroll, but they don't necessarily need the co-employment piece of that depending on just the facts of their organization, but they still want to have this group retirement plan. The PEP can fulfill that obligation and so you can join this pool employer plan.
But you don't have to be a part of the co-employment arrangement and you still get the benefits of an aggregated retirement plan, especially if you're a small employer in there. The other benefit is there's actually a professional organization called the Pool Plan Provider or PPP.
Which is professional fiduciary that's managing these plans. So it's actually not the PEO that's sponsoring the plans. Oftentimes it's a separate pool plan provider whose full-time job it is, is to administer retirement plans. And so that's just another nice thing. You still get that fiduciary outsourcing. And the other thing is because these are just newer, they've been around for less time, the technology has enhanced.
Enhance substantially. So oftentimes pricing can be a lot more flexible with pooled employer plans and closed multiple employer plans. Meaning as your plan gets larger, you might be able to get lower and lower fees, where in other closed multiple employer plans you might have bigger plans subsidizing smaller plans so you can quickly outgrow the closed MEP if your plan gets big.
So it just has very a lot of similarities, but it now allows it for if you're administrative services only and you might have some more flexibility on pricing and potentially more flexibility on plan design as well just because there's enhanced technology as these are just newer, they've been around for five-ish years in the marketplace.
And and and we really see this is where the future of a lot of retirement plans going are joining these pool employer arrangements. The last type of retirement plan that Brad and I are going to talk about is the single employer plan. So this is your typical 401K or 403B plan.
These are plans where you would be the sponsor to the plan. You would go and you'd find an advisor to work with, a record keeper and a third party administrator to work with the three key kind of functions of the vendors that operate a retirement plan on your behalf that help you with all the compliance work that help you with actually holding the assets and a website to log in and trade and invest your assets as a participant in the.
The plan, then the advisor is usually helping you with all the fiduciary work and also meeting with your employees. So these are plans you get set up on your own. In general, what we see with these plans is as you get bigger, as you cross that 100 employee threshold, 203 hundred, you can get pretty attractive single employer plan pricing where because you're not going to be on a fee grid or anything.
Maybe that's constrained in this multiple employer plan. It's often these plans as you get bigger, once you cross a certain threshold, estimating about 100 employees plus a single employer plan might be more be less expensive, excuse me, less expensive than joining one of these pooled plans.
So as your plan gets bigger, you're probably going to want to do a check even if you're part of a closed multi-employer plan. Does it make more sense to have my own plan in place versus joining what the PEO or the pooled plan provider is sponsoring in these things? The other thing that they do is they have much more enhanced and flexible plan design features. When you offer your own plan, it's fully custom.
To basically what the law can allow as long as your vendor that you've selected can handle that, which oftentimes has the outcome of being able to create additional savings above the 23,500 for maybe your highly compensated employees. So Brad, do you want to talk a little bit about what maybe maybe you're a small organization, you're less than 50 employees, but you have a lot.
High paid earners that want to save more than that 23,500, what are some of the plan designs that those small entities might be able to participate in if they sponsor a single employer plan?

Beausoleil, Brad   30:05
Yeah, I I mean for the first one you we mentioned earlier that $23,500 figure that is for employees for on the employer side, you know we can get up to $70,000 and then catch up contributions on top of that to get to 77,500.
So sometimes we employers want to target the owner or the highly compensated employees to try to get them to that figure in a 401K plan and that could be done if if the testing works out through like a new comparability profit sharing design.
Where you know all the staff is, you know we're required to give all the staff a contribution, but potentially we could get to that sort of number in trying to target the principles of a firm. But on top of that, that sometimes that $77,500 figure is is not enough for some of.
The clients that we work for work with and then we can introduce a cash balance plan in combination with that and a cash balance plan kind of blends in a 401K plan and a pension plan together. You know it's a required plan with required contributions for at least three years and an actuary.
Involved under under those arrangements, you know we you could potentially put in $100,000 additional up to a total of 300,000 and fifty $350,000 potentially in one year for a a principal of one of these firms. So it's definitely if.
You know, if you're in a situation where you're looking for like a greater tax deductions or you're talking to your accountant, it is something to bring up and it can be done and we can implement it as well.

Jones, Kameron   31:45
The the other area, so if you have highly earned, if you have high earners that want to save more than the 22,500, you want to have, you want to at least look at single employer plan before just automatically joining the pooled plan because there might be some limitations on the ability. The other thing is if you're a really heavy M and A organization, whether you're buying a lot of firms with retirement plans or you're a part of a.
Maybe a platform owned by a private equity firm that's going through a lot of transactions that can get really sticky from a plan design perspective and what we call control group IRS laws. So being a part of the pooled plan can be pretty limiting in how you can navigate some of those changes from a transactional perspective. So that's something else to be aware of the retirement plan world.
Is riddled with a lot of complexity when it comes to M and A. So a single employer plan actually might be a a more conservative way to go. If you do anticipate a lot of heavy M and A in your future, whether you're the one buying firms or you're merging with other entities as well, that that's a pretty substantial consideration.
But to keep in mind, when you're sponsoring your own retirement plan, you now have the costs are as you're bigger, it could be lower than the group plan, but as you're smaller, it's probably gonna be more expensive to sponsor your own plan. You're also the fiduciary, so you're gonna have to be meeting on a consistent basis to monitor and choose the investments and you just go through a lot of the work of.
Making decisions on the fiduciary aspects of a retirement plan, negotiating fees with vendors. Oftentimes if if you hire an advisor, they can do a lot of the work for you, but you still you still have a time commitment to that. The last thing is to look at the payroll integration. So if you're sponsoring your own plan with a vendor that has no connectivity to the PEO you've joined, because let's say you.
A PEO makes sense for your health insurance and your payroll and your HR outsourcing, but now you want to sponsor your own 401K plan plus a cash balance plan. You definitely have the ability to do that. There just might not be payroll connectivity. So that's definitely something to look at is you might just be processing payroll on a manual basis, which is very possible. It's a task that happens all over the country all the.
Time, but do you have the staff? Do you have the resources? Is that an additional workflow that you can account for if you're going to do the single employer plan where you might get automation if you join the PEO sponsored closed multiple employer plan as a as an example against that. So as you can see, there's a lot of levers to look at. There's the payroll.
There's the plan design flexibility. There's the cost of these programs. There's if you want to be a fiduciary, are you at the size of an audit? All these things kind of really weigh into which of these three plans makes the most sense for me and where I'm at and and your right decision now might be different than the right decision in three to five years from now as your organization grows and changes and adds and.
Employees changes the structure, whatever the changes might be. So it's good to not only go through this process when you're making the decision, should you join a PEO, should you have a return plan, but as you remain on that PEO, consistently do what we call turning over stones. Does this continue to make sense for my retirement plan to be in this group plan or should I spin out and start my own or?
You know, just keep looking at it, keep refreshing it, because what the right decision is today might be different than what the right decision is for your organization in the future. So that's that's the number one take away we'd recommend is to just make sure you have a proactive planned process for just turning over stones every couple of years.
To make sure you continue to remain in the same place, even if you do join one of those really nice, convenient, outsourced group retirement plans like the Closed Multiple Employer plan.
So really, Brad, a couple questions that we get a lot of time that I'd love for you to be able to speak to. You know, first is a lot of organizations when they're joining a PEO and they already have a retirement plan and they're saying, should I join this closed multiple employer plan? They ask.
Can I work with my current financial advisor or TPA if I join the PEO's retirement plan?

Beausoleil, Brad   35:24
And the answer could be yes. It all depends on the PEO you're joining it are the are the benefits extracted from you know not part of that PEO. You know you certainly can can keep your plan and still join the the PEO so.

Jones, Kameron   35:41
Yeah, but but usually some PEOS will allow you to keep paying your financial advisor to meet with your employees through that. Others will not depending on the type of structure they have. So that's definitely a question to ask each specific PEO. So if you're looking at a couple, you might get a different answer depending on the type of retirement plan they offer, what kind of flexibility they've built in there, but usually you're not able to ever use the same TPA.
Who's doing your testing and your 5500? Because usually the PEO group retirement plan is is handling those functions. It's just a question, can your advisor get paid on that as well? Another question we're getting is we're considering a PEO, but our company already has a simple IRA, another type of group plan that's really just.
You know, different function, not a 401K, but a simple IRA, which allows for people to save their own money plus employers to put some dollars into a group IRA plan for everybody. How would a transition work for a company that offers a simple IRA if they're looking at joining maybe one of these closed multiple employer plans through the PEO?

Beausoleil, Brad   36:38
Yeah, I mean, traditionally you can only have one plan in place at a time. So that was always, let's wait till December 31st. We'll terminate your simple IRA and we'll start your new plan as of January 1st of next year and really do a lot of planning around that.
Um, but with you know with Secure 2.0 you can do a mid year conversion now.
So that your plan that you're setting up would have to be what is called like a safe harbor plan design where you're given a, you know, a contribution, a required contribution to your employees. So it is possible now and there is a formula in place about how much you can put in.
It's like how many days of the year you know that you were in the simple and then also how many days of the year that you're in the 401K and you're able to come up with what the limit someone could put in for the year because the limits are higher in a regular 401K than a simple IRA just like we discussed with the state-run plan, so.
So that is something to keep in mind. And then once you do move over to the the, you know, I I say like a real plan, like the 401K plan, then you'll be able to start doing the Safe Harbor contribution just on those wages. Once you move over to that plan, there is something to consider too that you do need to have a simple IRA for at least two years before.
You can I you can roll it over into a a retirement plan. So that's just something to keep in mind during that conversion process.

Jones, Kameron   38:08
Yep. So in summary, we used to have to wait till just one date per year for any simple RA to terminate and then start a group retirement plan like a 401K or join a closed map. Now there is an option mid-year, but it comes with some limitations on what kind of plan design you can offer if you're doing that mid-year, which comes with an expense to the organization.
So another question we get a lot of times, Brad, we're under 10 employees, we're too small the matter for compliance. With all the secure 2.0 compliance coming into place and some of these new rules, should we just wait until we're bigger to look at that or should we focus in on it now even when we have 10 employees?

Beausoleil, Brad   38:43
I I guess it could be on a case by case basis, but whenever we're setting up new plans it it it doesn't hurt to get out in front of it because you know at times it's it's pretty, especially if you're a growing company, you can get above that 1010 employee limit pretty quickly.
And then you're kind of monitoring each year, you know, hey, do we need to do some amendments to our plan document to make sure we're adding things like automatic enrollments or you know, other other pieces that you could opt out of if you were under the 10 employee, you know, figure.
So my my thought process is always to get out in front of it. Unless you know, hey, we are only ever gonna have four or five employees and you know, it's just the six of us that have been here forever.

Jones, Kameron   39:18
Yeah.
Yep. So definitely good to have a discussion on that and just don't assume that you're good because you're less than 10, right? Have discussion because some things might be relevant, others might not. So with that, Alexa, I mean, that's the most popular questions that we get. I'm going to go ahead and pass it over to you, but really just put a bow on this from our perspective.
There's many plans out there, different fact sets are different fit for each plan. Really just making sure you have an expert to talk to. I think when you're making your considerations and having a process where you relook at it every two, 3-4 years I think is is just a good best practice to have when reassessing your organization and its retirement benefit offering. So back over to you.

Ciampi, Alexa   40:07
Thanks, Cameron. Thank you, Brad. And along those same lines, right, reevaluating what you have in place from a retirement perspective, we recommend the same on your benefits. If you're a small or mid-sized company, it makes sense to explore PEO. If you're not in a PEO today, NFP developed our own PEO Center of Excellence several years back and you see.
A few faces of our leadership team here, but we are supported by an amazing team behind the scenes, Adrienne Gilbertson, Ashley Bunkers and Ashley Milton to really help you see if PEO could be a great solution for your organization. So supporting you from.
Education, understanding what it means to join a PEO, understanding the different solutions within a PEO as we mentioned, right, fully bundled PEO solution, carve out benefits, maybe carve out the retirement as Cameron and Brad went through those different scenarios and also the ASO solution we can.
Help find the right solution for you and and what that model looks like. Analyze the results. We have a panel of a large library of different PEOS that we work with. We are agnostic, but we will find you the right one that aligns best to your needs and your goals as as an organization and.
Get our preferred pricing and negotiated contract terms with each of those and present them to you in a very easy to read comparison. More importantly, support you through that implementation. If you do decide going the PEO route is a good fit and then staying involved throughout the the lifetime of your partnership with them, making sure that the PEO.
PEO is providing you that top tier service that you signed up for and if they're not resolving it and being a point of escalation if we can and then finding alternatives if if we need to. If you know we are evaluating it every few years and determine that you you do need to find a different partner, we can help you with that but we'll be.
Be there along the way at renewals time and then on an ongoing basis. So really excited to have been able to present this to you today as an option PEO and then alongside Brad and and Cameron with the different types of retirement programs that you can pair alongside a PEO. Amber, I'm going to pass it back to you.

Posthauer, Amber   42:23
All right. Thanks, Alexa. That brings us to the end of today's presentation. On behalf of all of us here, I want to thank our speakers for sharing their insights. As a reminder, the recording insights will be emailed to you in the next couple of days. If you'd like to continue the conversation or have additional questions, please reach out to us.
Thanks again and have a wonderful day, everyone.