How does the plan work?
Fidelity Advantage 401(k)℠ is a pooled employer plan (PEP) that allows multiple unrelated small-business employers to join the same plan.
This allows Fidelity to take on more of the administrative tasks that would normally fall on you, saving you time and money.
We’ll contact your eligible employees to let them know when it’s time to enroll in the plan.
You’ll need to make matching contributions, up to 4%* of the annual gross compensation of all your employees.
It’s a simple, affordable way for you and your employees to save for retirement.
*The employer matches dollar for dollar up to the first 3% of an employee’s annual compensation contributed to the plan, and 50 cents per dollar for the next 2%.
Now that you’re familiar with how the plan works, let’s dive into the details.
A 401(k) is a workplace savings plan that you offer to your employees as part of their benefits package. It helps them save money for retirement before they pay taxes on it, which can reduce the amount they pay in taxes each year.
Each participating employee in the plan will have the opportunity to select the amount they'd like taken out of each paycheck to put into their retirement account.
A provision of the SECURE Act, which went into effect in January 2021, allowed the private sector to create a new 401(k)-style retirement vehicle specifically for small businesses called a pooled employer plan (PEP). It helps fill the retirement coverage gap by allowing providers (like Fidelity) to offer the same plan to multiple unrelated employers at a lower price, making it easier for small businesses to access retirement savings plans. The Fidelity Advantage 401(k)℠ is Fidelity’s PEP.
Fidelity has designed its PEP to be a Safe Harbor 401(k) plan. This means that the employer agrees to make matching contributions, up to 4%* of the annual gross compensation of all employees, which is based on a standard contribution formula. We cover this in detail in the cost section.
*The employer matches dollar for dollar up to the first 3% of an employee’s annual compensation contributed to the plan, and 50 cents per dollar for the next 2%.
Employers can automatically bypass some of the year-end testing requirements that are required for a traditional 401(k) plan. This means less administrative work for you.
No, the plan details, such as eligibility, investment lineup, and contributions are set by Fidelity to make things easier for you. We made these choices with small-business needs in mind.