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What is a PEO Retirement Plan?

4 min read

Growing businesses are constantly seeking ways to recruit and retain top talent. While foundational components like salary, work commute, and office culture all factor into an employee’s decision to accept and stay within a role, employee benefits, like retirement plans, also have a heavy influence.

Creating a comprehensive retirement plan for your employees is a great way to invest in your team. However, managing these plans on your own can be a hassle. By partnering with an experienced professional employer organization, or PEO, you can offer top-quality retirement plans to attract and sustain quality employees. Read below to learn more about PEO retirement plans and how they can help your business grow to new heights. 

What is a Retirement Plan?

A retirement plan, commonly called a 401(k), is an employer-run, tax-advantaged, defined-contribution retirement investment plan. Employees who enroll in a retirement plan with their employer agree to contribute a percentage of their monthly earnings to an investment account. The employer will then offer the employee a selection of investment options, typically including various stock and bond mutual funds. As a result, the employee’s retirement fund will grow as long as they are still employed. 

Because the employer is in charge, these traditional retirement plans are categorized as single-employer plans. A single-employer plan is defined as a plan created and managed by one company or closely-affiliated organizations. This single employer manages the plan and is liable for all its administrative risks. 

What Makes a PEO Retirement Plan Different?

When outsourcing a PEO for your HR needs, your business’s retirement fund will look slightly different. Because PEOs generally supply HR services to several different client companies, their retirement plans are categorized as multiple employer plans. A multiple-employer plan is a retirement savings plan used by two or more unrelated employers. Administered by a third-party sponsor, or in this case, a PEO, multi-employer plans to lessen an employer’s administrative costs and fiduciary liabilities, encouraging them to offer more employee benefits. 

What are the Benefits of a PEO Retirement Plan?

While any retirement plan will attract and retain employees, PEO retirement plans can offer additional benefits that will give your benefits package a competitive edge. The following benefits are associated with PEO retirement plans:


With a PEO retirement plan, you can customize your plan’s conditions, age limits, vesting, hour requirements, and entry window. Not to mention you can also customize matching options, choosing between the basic employer contribution and other less common methods like discretionary matching or safe harbor contribution. 


No matter how your plan is customized, your PEO will ensure it’s compliant with local, state, and national employment regulations. While your PEO reviews employment guidelines and handles reports and disclosures, you get to dedicate more time to your business’s core functions.

Reduced Expenses

PEO retirement plans can save employers the expensive costs of administering

them independently. For example, your PEO will submit your business’s annual audit with Form 5500, which would be a costly expense if outsourced from a certified public accountant or other financial professionals.

No Fiduciary Liability

Using a PEO retirement plan takes a weight off your shoulders as you mitigate your business’s liability risk. Your PEO will assume all responsibilities for transactions and funds linked to your retirement plan, meaning you, as an employer, can rest easy knowing your employees’ retirement funds are taken care of. 

Less Administrative Responsibilities 

Along with fiduciary responsibilities, using a PEO retirement plan also alleviates some administrative burdens. While managing your plan, a PEO will handle annual discrimination audit testing, loan dedication and review, self-harbor contribution reconciliation, and more. 

Simplify Your Business with 

At, we make it easier to find the perfect PEO provider for your business. With access to some of the largest PEOs in the country, our agents provide high-performing options that will unlock your business’s true potential. If you’re ready to take your business to new heights, connect with our team today to shop PEO quotes and receive competitive pricing within 24-72 hours!

Ready to take your business to the next level?

Contact us today to learn more about how we can help you achieve your goals.

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