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  • Writer's pictureMike Monroe

What is the difference between bundled, unbundled and pooled employer 401k programs?

An ERISA qualified 401k program has 3 major functions that must be performed:


Set-up Functions (Legal, TPA, or Advisor)

· Plan formation, set-up and updates


Administrative Functions (Custodian, Recordkeeper, TPA, Advisor and Legal)

· Holding assets

· Recordkeeping

· Administration and reporting

· Compliance management

· Legal

· Investment/fund selection and monitoring


Management Functions (Employer)

· Remitting contributions timely

· Performance monitoring

· Procuring insurance and bonds

· Vendor selection and monitoring

· Annual audit


Unbundled 401(k): An unbundled 401k program has multiple service providers that perform administrative functions. In an unbundled structure, the employer will typically start the 401k set-up by engaging a registered investment advisor (“RIA”) or performing a request for proposal (“RFP”) for an RIA. Once the advisor is selected, they will recommend or lead proposals for other administrative vendors including the TPA, recordkeeper, legal provider, and asset custodian.


In an unbundled structure, the employer will execute contracts with administrative service providers (multiple vendors) and will have management responsibilities of timely contribution remittance, performance monitoring, procuring insurance/bonds, vendor selection and monitoring and performing an annual audit (if more than 100 employees).


Bundled 401(k): A “bundled” 401k program has the same service provider operating in administrative functions. Examples of bundled solutions include Fidelity, Guideline online 401k, Standard, Prudential, Betterment, and ADP.


In a bundled structure, the 401k program is typically “pre-built” and the employer will only have to execute one contract with administrative service providers. The employer will likely not need legal support since the program is pre-built and has been approved by the IRS.


In a bundled structure, the employer will have the management responsibilities of timely contribution remittance, performance monitoring, procuring insurance/bonds, vendor selection and monitoring and performing an annual audit (if more than 100 employees).


Pooled Employer 401(k): A “PEP” 401k program has attributes of bundled and unbundled solutions.


In a PEP structure, the program is “pre-built” and the employer will only have to execute one contract; however, the service providers may be different depending on how the PEP was formed and structured. This provides the employer with high-quality service specialists and more options, while still maintaining a direct relationship and simple administration experience found in bundled solutions.


In a PEP structure, the employer receives benefit from having many of their management responsibilities also performed by the PEP (i.e.: performance monitoring, procuring insurance/bonds, vendor selection and monitoring and performing an annual audit). This is key differentiating feature for PEP’s versus bundle or unbundled solutions.


Next Steps


Interested in learning more? Go to the Mountain West 401k home page and complete the “get a quote” form today.


About the author


Mike Monroe is the founder of Mountain West 401(k).

Mike graduated from Gonzaga University with a finance and accounting degree and for the first 25 years of his professional career served in fiduciary roles as a Certified Public Accountant (“CPA’) and Chief Financial Officer (“CFO”) for many employers in the Pacific Northwest. Mike was the president of an employee benefits firm for 10 years where he launched the largest health insurance and 401k multiple employer programs for technology employers in North America, serving over 700 small business technology employers in 20 states.


Mike calls Tri-Cities home and volunteers as the President of the School Advisory Committee at Christ of King and U9 and U6 coach for the Three Rivers soccer club. Mike enjoys paddleboarding, soccer, skiing and hiking throughout the Inland Northwest.

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