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Private Equity in Penske Automotive Group 401(k) Plans: What Employees Should Know

Healthcare Provider Update: Healthcare Provider for Penske Automotive Group Penske Automotive Group employees typically receive healthcare coverage through a variety of providers depending on their specific plan selections, with major national insurers like Kaiser Permanente, UnitedHealthcare, and Anthem BlueCross BlueShield being among the options available. The exact provider often varies by location and the specific plan chosen during open enrollment. Healthcare Cost Projections for 2026 The healthcare landscape is set for significant upheaval in 2026, with potential premium hikes expected to exceed 75% for many Affordable Care Act (ACA) marketplace enrollees, largely due to the expiration of enhanced federal subsidies. Penske Automotive Group employees, particularly those nearing retirement, may face steep increases in their healthcare costs as insurers respond to rising medical expenses and price inflation. With the ACA marketplace seeing some state requests for premium increases reaching as high as 66%, careful financial planning will be essential for employees heading into another challenging year in healthcare affordability. Click here to learn more

'Penske Automotive Group employees should carefully weigh transparency, costs, and flexibility when evaluating new 401(k) options, as thoughtful planning today can make a meaningful difference in retirement outcomes.' — Michael Corgiat, a representative of The Retirement Group, a division of Wealth Enhancement.

'Penske Automotive Group employees navigating evolving 401(k) choices should focus on understanding fees, liquidity, and long-term impact to help align their retirement strategies with their personal goals.' — Brent Wolf, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

The opportunities and risks of private equity’s entry into 401(k) retirement plans.
The impact of fees, transparency, and liquidity on long-term retirement outcomes.
Key considerations Penske Automotive Group employees should weigh before adding private equity to their portfolios.

For several years, private equity firms have been seeking access to corporate retirement plans, which could affect the investment choices available in 401(k) accounts. Traditionally, these alternative investments have been limited to wealthy and institutional investors, who provide private equity firms with funds they can use to buy equity stakes in unlisted private companies. Under the Employee Retirement Income Security Act (ERISA), however, private equity funds have been excluded from most workplace retirement plans due to their high fees, limited liquidity, and opaque reporting requirements. ¹

New federal guidelines may be shifting this landscape. In an Executive Order issued in August 2025, the Trump administration supported access to alternative assets for 401(k) investors. ² While these changes may broaden diversification opportunities, they also raise questions about appropriateness, costs, and transparency for Penske Automotive Group employees planning their retirement. 'It's a historic change in access, but it's also a time that calls for caution,' said Neva Bradley of Wealth Enhancement. Although private equity may offer diversification benefits, a higher risk profile and less transparent pricing require careful consideration.

Juggling Promise and Risk

Private equity funds have historically delivered strong long-term returns, ³ but more recent conditions have narrowed the edge over traditional stock indexes. ⁴ Rising interest rates and volatile markets have made performance less consistent, which is an important factor for Penske Automotive Group workers evaluating retirement strategies. While opportunities for gains remain, the trade-off in volatility cannot be ignored.

Fee structures complicate matters further. Compared to low-cost index funds, private equity investments involve multiple layers of expenses. According to Bradley, 'the fee structures and volatility can significantly reduce those gains over time.' Penske Automotive Group employees should note that these fees can be ten times higher than standard 401(k) options, ⁵ which can diminish long-term compounding.

Challenges of Transparency

One of the largest differences between mutual funds and private equity is reporting. Mutual funds tend to publish daily prices and transparent performance updates, while private equity reports are typically quarterly and valuations are often based on estimates. ¹ This lack of standard benchmarks can make it difficult for even seasoned investors to evaluate performance consistently. For Penske Automotive Group participants, this means private equity may feel less straightforward than traditional investment choices.

The Cost Aspect

Private equity is also known for its high fees. Typical structures include a 1% to 2% annual management charge plus performance-based incentives, compared to about 0.25% for many mutual funds. ¹ Over decades, these higher costs compound, especially for retirement accounts where long-term growth is important. As Bradley points out, 'those costs compound over decades,' underscoring the need to weigh fees against potential returns.

Important Things to Consider for Retirement Planning

For Penske Automotive Group employees who may encounter private equity options in their 401(k), here are some key considerations:

Liquidity: Investments are often locked in for years with limited access.
Costs: Carefully review and compare fee structures.
Timeline: Private equity may lack the flexibility needed closer to retirement.
Diversification: If included, it should represent only a small portion of the portfolio.

Bradley summarized, 'Private equity is not a panacea, but it can contribute to complex portfolios.' Penske Automotive Group participants should evaluate transparency, fees, and personal risk tolerance before making decisions.

One notable development is that target-date funds that include private equity and private credit holdings have been shown to potentially boost retirement income by 5% to 15% over 40 years, ⁶ provided top-tier managers are selected. For Penske Automotive Group employees, this underscores both the opportunity and the complexity of integrating private equity into a long-term plan.

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Sources:

1. Investopedia. ' Private Equity is Coming for Your 401(k): How to Protect Yourself ,' by Daniel Liberto. 17 Jan. 2025.

2. The White House, Presidential Actions. ' Democratizing Access to Alternative Assets for 401(k) Investors ,' Executive Orders. 7 Aug. 2025.

3. Institutional Investor. ' Why Private Equity Wins ,' by Dawson Partners. 24 Mar. 2025.

4. Morningstar. ' How Attractive Is Private Equity? ' by Jack Shannon. 11 June 2025.

5. Investopedia. ' Private Equity Explained With Examples and Ways To Invest ,' by James Chen. 2 Sep. 2025.

6. BlackRock Advisor Center. ' How private markets could improve retirement outcomes ,' by BlackRock Retirement Perspectives. 26 Jun. 2025.

What are the specific eligibility criteria for participation in the Penske Cash Balance Plan, and how can employees of Penske ensure they meet these requirements as they work towards retirement? Furthermore, how does the plan address the transition from being a participant to receiving benefits once the eligibility criteria are met?

Eligibility Criteria: Employees of Penske automatically become participants in the Penske Cash Balance Plan after completing a year in which they work 1,000 or more hours, as long as they are in an eligible group. To ensure they meet the eligibility requirements, employees should confirm they meet these conditions annually and consult the Summary Plan Description for details(Penske Cash Balance Pla…).

In what ways does the Penske Cash Balance Plan differentiate itself from traditional defined contribution plans, and how can employees of Penske navigate the choices available to them, including lump sum distributions and annuities? Additionally, what implications do these options have for long-term financial planning for retirement?

Plan Differences: The Penske Cash Balance Plan is a defined benefit plan, offering benefits similar to a defined contribution plan but providing additional options like lump-sum distributions and annuities. Employees should carefully evaluate these options, as lump sums provide immediate access to funds, while annuities ensure steady long-term payments. Both choices impact long-term financial stability(Penske Cash Balance Pla…).

How does the concept of vesting apply to the Penske Cash Balance Plan, and what are the steps that employees of Penske should take to ensure they understand their rights to these benefits prior to retirement? Furthermore, what resources are available to help employees fully grasp the nuances of vesting in relation to their individual situations?

Vesting: Vesting refers to an employee's right to receive benefits even if they leave Penske before retirement. Employees must meet specific requirements to become vested, and they can consult the Brief Plan Summary to fully understand their rights(Penske Cash Balance Pla…).

What mechanisms does the Penske Cash Balance Plan have in place to ensure that employees can trust they will receive their benefits? How does this assurance interact with projected benefits and calculations provided through DB Online, and what should employees of Penske do if they have concerns about the accuracy of their benefit estimates?

Benefit Assurance: Benefits from the Penske Cash Balance Plan are paid from a trust fund established by the company and insured by the Pension Benefit Guaranty Corporation (PBGC). Employees can rely on the trust fund and the PBGC for benefit security, and should contact the Customer Contact Center if they have concerns about benefit estimates(Penske Cash Balance Pla…).

How are pension benefits from the Penske Cash Balance Plan typically taxed, and what strategies can employees of Penske implement to manage tax implications effectively during their retirement planning? Moreover, what are the possible ways to minimize taxes on lump sum distributions compared to annuity payments?

Taxation: Benefits from the Penske Cash Balance Plan are generally taxed as ordinary income. Employees can manage taxes effectively by rolling over lump-sum distributions to an IRA to defer tax payments. Careful consideration of lump sums versus annuities can minimize taxes over time(Penske Cash Balance Pla…).

What are the various forms of payment options available under the Penske Cash Balance Plan, and how should employees of Penske evaluate their choices regarding life annuities versus lump sum payments? Additionally, how do these payment options affect short-term and long-term financial stability in retirement?

Payment Options: Employees can choose between lump-sum payments and various types of annuities. Evaluating these options is essential for balancing short-term and long-term financial goals, as lump sums offer immediate liquidity, while annuities provide lifetime payments(Penske Cash Balance Pla…).

In the event of a divorce or separation, what specific procedures must employees of Penske follow to protect their pension benefits, and how does a Qualified Domestic Relations Order (QDRO) impact these benefits? What guidance does the Penske Cash Balance Plan provide to ensure that the division of assets is conducted appropriately?

Divorce and QDRO: In the event of a divorce, employees must obtain a Qualified Domestic Relations Order (QDRO) to divide their pension benefits. This court order ensures that the division is legally recognized, and employees should refer to plan procedures for guidance(Penske Cash Balance Pla…).

How can employees of Penske prepare for the multitude of decisions they need to make as they approach retirement, and what resources does the company offer to assist in this decision-making process? Additionally, how do the various teams and services provided by Penske streamline the retirement transition for its employees?

Retirement Preparation: Penske offers specialized retirement counseling and customer support services to help employees navigate retirement decisions. These resources can assist employees in making informed choices and smooth their transition into retirement(Penske Cash Balance Pla…).

What are the major types of annuities offered by the Penske Cash Balance Plan, and how should employees of Penske assess the suitability of these annuity options for their personal retirement needs? What does the company recommend in terms of beneficiaries and their implications for future payments from the plan?

Annuity Options: Penske offers various annuities, including life annuities and joint survivor annuities. Employees should assess these based on their personal needs and consult the company for recommendations regarding beneficiaries to ensure future payments are secure(Penske Cash Balance Pla…).

How can employees of Penske contact the company to inquire further about the Penske Cash Balance Plan and its intricacies? What methods of communication are available, and what information should employees gather beforehand to make their inquiries as productive as possible?

Contact Information: Employees can contact the Penske Cash Balance Plan administrators by calling 1-800-755-5801 for further inquiries. It's advisable to have all relevant documents and questions prepared in advance to make the discussion more productive(Penske Cash Balance Pla…).