Private Equity Meets 401(k)s: Legal Goldmine or Compliance Nightmare?

Are your clients ready for what could be a seismic shift in 401(k) investing? The DOL's latest guidance on Pooled Employer Plans might seem routine, but it's setting the stage for something much bigger.

Here's what many employers are missing: even when you join a PEP to reduce fiduciary liability, you're still on the hook for prudently selecting and monitoring your PEP provider. It's not the liability shield some think it is, and that's creating real exposure for companies that haven't done their homework.

With PEPs now covering over 618,000 participants and nearly $5 billion in assets, we're seeing more employers jump in without fully understanding their ongoing responsibilities. Add the Trump Administration's upcoming executive order on private equity access in 401(k)s, and we could see a flood of new alternative investment options through PEPs.

This creates both opportunity and risk. Companies that get their PEP provider due diligence right could offer employees exciting new investment choices. Those that don't could face significant ERISA liability down the road.

At EWGC, we're helping clients navigate these evolving fiduciary requirements before problems arise. The key is building robust provider evaluation and monitoring processes now, not after the DOL comes knocking.

How are you advising your clients on PEP provider selection? What due diligence frameworks are working best in your experience?

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