Case Study: Trucking School

Converting from profit sharing plan to a safe harbor 401(k)

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The Challenge

For more than 20 years the company only offered a profit sharing plan with employer contributions. They were interested in turning the retirement plan into a 401(k) where participants could defer and manage their own portfolios. The company has twenty locations across the country, and participant education efforts needed to be able to support these satellite locations. There was no formal Investment Committee in place.

The Solution

We began with assembling and training the Investment Committee for the retirement plan.

The strategy included adding automatic enrollment into the 401(k) plan at 6% with automatic escalation up to 10%, as well as implementing a coordinated education plan to explain the new options available within the 401(k). The strategy was designed to engage participants in saving for their own retirement in addition to the employer matching contributions.

Because participants were never responsible for managing their own investment allocation in the profit sharing plan, we re-enrolled the entire plan into age appropriate Target Date Funds to insure participants have a diversified portfolio.

We held multiple webinars that employees at remote locations could receive guidance for enrolling into the 401(k) Plan. One-on-one consultations were made available to participants. A number of employees immediately took advantage of this through phone appointments and email communication.

We then targeted financial wellness topics to participants both over 50 and under 50. The messages needed to be specific to these participants at different points in their financial lives. We held additional webinars throughout the year that focused on financial wellness topics such as household budgeting, social security, medicare, and college savings strategies.

To help soon-to-be-retirees prepare for the transition into retirement, Stonebridge Financial Group offered to meet with participants who were within five years of retirement and prepare a sophisticated, personalized cash flow analysis using goal based financial projections. The participants’ spouses were extended the invitation to attend these meetings.

CLIENT PROFILE:

INDUSTRY TYPE: Trucking School

GEOGRAPHY: Nationwide

NUMBER OF EMPLOYEES: 165

PLAN TYPE: Safe Harbor 401(k)

“Automatic enrollment and use of target date re-enrollment made an immediate positive impact for our plan participant’s.”

“Our Investment Committee is in a better fiduciary position after engaging Stonebridge Financial Group.”

Results

  • Participation after enrollments started at 87%
  • 72% of employees are on track to retire successfully
  • Employee deferrals average 5.7%
  • Introduced a financial wellness program
  • HCE’s are able to fully maximize their tax deductible contributions.
  • 95% of plan participants are utilizing an age appropriate Target Date Fund
  • Stonebridge Financial Group formalized the Investment Committee and engaged the plan as a 3(21) co-fiduciary.
  • Combined with the company 4% match, most participants are achieving a savings goal of 9.7% annually.

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