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How PEO Retirement Plans Can Boost Employee Retention and Attract Top Talent

Retirement plan

In today’s competitive job market, it’s crucial for businesses to offer attractive employee benefits in order to retain top talent and attract new skilled workers. One such benefit that can make a significant impact is a comprehensive retirement plan. While many companies offer traditional 401(k) plans, partnering with a Professional Employer Organization (PEO) can provide additional advantages that can boost employee retention and attract top talent.

Cost Savings

One of the key benefits of a PEO retirement plan is the cost savings it offers for both the employer and the employees. By partnering with a PEO, businesses can leverage the buying power of a larger organization, which often translates into lower investment fees and administrative costs. This not only saves money for the employer, but it also allows employees to maximize their retirement savings by reducing the amount of fees they pay.

Wider Range of Investment Options

In addition to cost savings, a PEO retirement plan can also provide employees with access to a wider range of investment options. Traditional 401(k) plans often offer a limited selection of investment choices, which may not align with the diverse needs and preferences of employees. PEO retirement plans, on the other hand, typically offer a broader range of investment options, including low-cost index funds, target-date funds, and even socially responsible investment options. This flexibility allows employees to customize their investment portfolios based on their individual financial goals and risk tolerance.

Administrative Support

Another advantage of a PEO retirement plan is the added convenience and administrative support it offers. Managing a retirement plan can be a complex and time-consuming task, requiring HR teams to dedicate significant resources to ensure compliance and handle administrative tasks. By partnering with a PEO, businesses can offload these responsibilities to experts who specialize in retirement plan management. This not only saves time and reduces the burden on HR teams, but it also ensures that the retirement plan is being managed efficiently and in compliance with all relevant regulations.

Education and Support Services

Furthermore, PEO retirement plans often provide additional employee education and support services. These can include financial wellness programs, retirement planning resources, and one-on-one consultations with retirement specialists. By offering these resources, businesses can help their employees make informed decisions about their retirement savings and feel supported throughout their financial journey. This can enhance employee engagement, satisfaction, and loyalty to the company.

Compliance support

PEOs are well-versed in retirement plan compliance regulations and can help businesses navigate complex legal requirements. This can help businesses avoid costly penalties and legal issues associated with non-compliance.

Access to top-tier providers

PEOs have established relationships with reputable retirement plan providers, giving businesses access to high-quality investment options and services. This can help businesses offer competitive retirement benefits to attract and retain top talent.

Employee satisfaction and retention

Offering a comprehensive retirement plan through a PEO can enhance employee satisfaction and increase retention rates. Employees value the opportunity to save for their future and appreciate the convenience and support provided by PEO retirement plans.

Expert guidance

PEOs have a team of HR and retirement plan experts who can provide guidance and support to businesses and their employees. This expertise ensures that businesses are making informed decisions and are on track to meet their retirement plan goals.

Trustee Services

One of the primary responsibilities of an employer-sponsored 401k plan is to comply with the Federal ERISA Law. This includes tasks such as investment committee management, fund performance reviews, investment selection, fee assessments, and day-to-day plan functions. These tasks can be time-consuming and carry inherent risks, which is why they are expertly handled by the PEO. PEOs sponsor Multiple Employer Plans (MEPs) that offer comprehensive plan features similar to standalone plans, but with the added convenience of a simplified adoption process, ease of transfer, and reduced responsibilities for the worksite employer.

Trustees of PEO MEPs also engage independent CPA firms to conduct annual audits, at a significantly lower cost per employer.

9 Benefits of a PEO

PEOs offer many more benefits in addition to retirement plans.  Read our ultimate guide on the numerous benefits PEOs provide for your HR.

Types of PEO Retirement Plans

When it comes to PEO retirement plans, businesses have a few options to choose from. The most common types of PEO retirement plans include:

1. 401(k) Plans

This is the most popular retirement plan option offered by PEOs. It allows employees to contribute a portion of their salary to a retirement account, with the option of employer matching contributions. 401(k) plans offer a wide range of investment options and tax advantages for both employees and employers.

2. Simple IRA Plans

Similar to a 401(k), a Simple IRA plan is designed for small businesses with fewer than 100 employees. It allows employees to contribute a portion of their salary to a retirement account, with the option of employer matching contributions. Simple IRA plans are easy to set up and maintain, making them a popular choice for small businesses.

3. SEP IRA Plan

 A SEP IRA plan is designed for self-employed individuals and small businesses. It allows employers to make contributions to their employees’ retirement accounts, based on a percentage of their salary. SEP IRA plans offer flexibility and tax advantages for employers, while providing retirement savings opportunities for employees.

4. Profit-Sharing Plans

This type of retirement plan allows employers to share a portion of their profits with employees. Contributions to the plan are made at the discretion of the employer and can be based on a percentage of annual profits or other predetermined criteria. Profit-sharing plans can be a valuable addition to a comprehensive employee benefits package.

When choosing a PEO retirement plan, businesses should consider their specific needs and the needs of their employees. It’s important to evaluate the features and benefits of each plan, as well as any associated costs and administrative requirements.


PEO retirement plans offer numerous advantages for businesses. From cost savings and investment flexibility to administrative support and compliance assistance, partnering with a PEO can help businesses provide secure and reliable retirement solutions for their employees. By offering these benefits, businesses can attract and retain top talent, enhance employee satisfaction, and drive the overall success of their organization.