A pooled employer plan (PEP) is a single defined-contribution plan operated through a pooled plan provider (PPP). The PPP is responsible for ensuring that people who handle PEP assets, or are fiduciaries, are bonded in accordance with ERISA §412. The phrase “in accordance with” matters: DOL does not read the SECURE Act to require a bond for a fiduciary or other person who does not handle plan funds or other property. 29 U.S.C. §1002(43)–(44) U.S. Department of Labor Information Letter, Sept. 7, 2022
Review a pooled employer plan in this order
- 1Confirm that the arrangement satisfies the statutory PEP definition and identify the registered pooled plan provider.
- 2Map PPP, administrator, trustee, participating-employer, payroll, and service-provider functions to natural people.
- 3Identify who can receive, transfer, disburse, sign for, finally direct, or supervise plan property.
- 4Test person- and institution-specific exemptions without extending one exemption to other handlers.
- 5Calculate 10% of the funds or other property handled, subject to the statutory floor and PEP maximum.
- 6Review the bond form, named insured, shared limits, current surety information, and assisted application with The Southern Agency.
The pooled plan provider has a compliance responsibility
The PPP must be a named fiduciary and plan administrator and is responsible for ensuring that persons described in §1002(44)(A)(iv) are bonded in accordance with §412. That responsibility is broader than simply buying a single certificate in the PPP's name. The review must reach the natural people whose functions constitute handling and any other plan or provider personnel whose authority creates the statutory risk of loss. 29 U.S.C. §1002(44) U.S. Department of Labor Information Letter, Sept. 7, 2022
Not every fiduciary or participating-employer worker is a handler
Handling is functional, not title-based. Custody, power to transfer or disburse, authority to sign, final authority over investments, and supervision that creates a risk of loss can qualify. Controls may show that a person lacks the required risk of loss, but controls are not an independent exemption. 29 C.F.R. §2580.412-6 FAB 2008-04, Q5–Q8 and Q18–Q21
DOL's PEP letter specifically examines employees of participating employers who help collect and transmit participant contributions. A person whose work is genuinely ministerial and controlled may not handle plan property. A person who can redirect withheld contributions, change a destination, release a transfer, or exercise final authority may reach a different result. Review actual permissions, controls, and timing rather than job titles. U.S. Department of Labor Information Letter, Sept. 7, 2022 29 C.F.R. §2580.412-6
The ordinary PEP maximum is $1 million—not a mandatory amount
For each nonexempt handler, §412 generally starts with 10% of the funds or other property handled during the preceding reporting year, with a $1,000 floor. For a PEP, the statute substitutes $1 million for the ordinary $500,000 maximum. It does not require every PEP or handler to carry exactly $1 million. The Secretary's notice, hearing, and record authority to require more than the ordinary maximum remains subject to the 10% limitation. 29 U.S.C. §1112(a) U.S. Department of Labor Information Letter, Sept. 7, 2022
A $1 million maximum does not replace the calculation
Assume a nonexempt PEP handler's supported calculation is $180,000. PEP status does not increase that result to $1 million. Conversely, if the 10% calculation exceeds $500,000, the PEP substitution can allow a required amount above the ordinary non-PEP maximum, up to $1 million unless another lawful rule changes the result. 29 U.S.C. §1112 U.S. Department of Labor Information Letter, Sept. 7, 2022
Shared coverage must preserve the plan's required protection
A bond may cover multiple people or plans, but each named plan must retain the protection it would have received under a separate bond. Review schedules, named insureds, aggregate and per-occurrence limits, and whether another claim could erode the PEP's required recovery. A master program or pooled administration arrangement is not itself proof that the allocation works. FAB 2008-04, Q23–Q25 and Q39–Q40
Facts to assemble for assisted review
- The PEP and PPP names, governing documents, registration information, and current plan year.
- The natural people at the PPP, trustee, administrator, participating employers, payroll providers, and other service providers who may handle property.
- The highest amount each identified person handled, including predecessor handling during the applicable reporting period.
- Any employer securities, shared bond structure, institutional exemption, existing coverage, or requested $1 million limit.
- The desired effective date and any additional application information The Southern Agency requests for its assisted review.
Participating-employer roles can differ
Assume one employer's payroll clerk uploads a locked file but cannot change the destination or release funds, while another employer's payroll director can redirect withheld contributions. The director may handle plan property while the clerk may not, based on the complete controls and timing facts. PEP participation alone does not decide either person's status. U.S. Department of Labor Information Letter, Sept. 7, 2022 29 C.F.R. §2580.412-6
Methodology, source review, and next step
This is an educational federal §412 screen, not a determination of tax qualification, fiduciary prudence, state-law duties, or actual bond or insurance-contract coverage. The official sources are reviewed as of the date shown above. After identifying a nonexempt handler, use the ERISA bond requirements guide for form, surety, and current reporting review and the amount guide for the handler-by-handler calculation. 29 U.S.C. §1112 29 C.F.R. §2580.412-11