A Win for PEPs and the Self-Employed: SEC Staff Statement Opens CIT Access

On May 4, 2026, the staff of the U.S. Securities and Exchange Commission (SEC) issued guidance that removes barriers that have prevented pooled employer plans (PEPs) from investing in collective investment trusts (CITs).

SEC Rule 180, a 45-year-old securities registration exemption, permits retirement plans with self-employed participants (like partners who work for their own firms, small business owners, sole-proprietors, and gig workers) to invest in CITs only if certain conditions are satisfied. One of those conditions is that the plan covers employees of a “single employer” – on its face this is a barrier for PEPs, which, by definition, cover employees of multiple employers. The new SEC staff guidance removes this barrier by clarifying that PEPs themselves may be treated as a “single employer” under Rule 180 and thereby satisfy this condition.

The staff’s position is clearly consistent with Congressional intent. Congress created PEPs in the SECURE Act to extend the economies of scale and other cost savings available to plans sponsored by large businesses to small businesses. Since CITs are a critical driver of those savings, allowing all PEPs to access them was an important step.

In plain terms, a major structural barrier to PEPs delivering their intended benefits has been removed. Now, PEPs have a clear path to invest in CITs, which generally are more cost-efficient than mutual funds.

This truly matters for the advisors and the institutions we serve, for their clients, and for the realization of Congressional intent to improve access to retirement plans that offer attractive investment options and cost savings to American workers.

We would like to thank the Great Gray Legal team and others who contributed to this effort. In particular, we want to acknowledge the Legal team at Franklin Templeton, whose expertise and partnership helped make this possible, and Jeb Bowlus, Great Gray Trust Company’s Deputy General Counsel, who has worked on this project for six years. A letter he drafted for Great Gray’s predecessor identified the unintended barrier that Rule 180 created for PEPs to access CITs and was cited in the staff guidance. The issues he raised then were prescient, as PEPs and CITs have grown in popularity in recent years, increasing the urgency of solving this problem. This outcome reflects patient, thoughtful work, and the commitment to improving the U.S. retirement system that motivates us every day.

We will share more as the industry puts this new guidance into practice.