PLANSPONSOR - April/May 2018 - 22

Corporate 401(k) $10mm - $50mm
United Hardware
Distributing Company
M
any employees at United Hardware
Distributing Company, in Plymouth,
Minnesota, make a modest income-in
the $30,000 to $40,000 range-and
the company has annual turnover of
around 25%. Yet, the employer still puts
substantial effort into trying to get its
workers to save enough for retirement.
" We believe that today's work force who
are not engaged and do not understand
their retirement benefits are being set up
to fail, " says Steven Draeger, president and
CEO of the wholesale hardware distributor.
" It's our goal to have successful team
members while they're at our company, as
well as when they reach retirement age. "
Two-thirds of United Hardware's
employees work at its distribution center
in Milbank, South Dakota, in warehouse
jobs heavy on physical labor. " Most
of the employees' backgrounds are in
manual-labor work. It's definitely a rural
and farming community, and we also
have some farmers who work for us, "
says Cheryl Braun, director of human
resources (HR). " We require a high school
diploma or GED [general educational
diploma], but most of the warehouse
employees don't have a college degree. "
Modest incomes and a lack of financial
savvy have not stopped employees
from saving for retirement, however.
The United Hardware plan has a 90.25%
participation rate, 8.06% average deferrals
and a $73,684 average balance. Eightyeight
percent of participants save at the
6% match rate or higher. " It's all about the
employees being able to retire when they
want to, and for them not to be stuck in
a position where they have to work longer
than they want to, " Braun says.
Saving by Design
Automatic enrollment and voluntary automatic
increases have helped considerably,
Draeger says. " To get them started has not
been too difficult, and then it has been
relatively easy to get them to increase
what they put in by an additional 1% of
their wage annually. " For employees who
opt in to automatic escalation, it happens
as annual raises take effect. " Thus, it
goes unnoticed from their pocketbook, "
he explains. As a result of gradually
increasing contributions, he adds, " they
are better positioned for the future. This
is very rewarding to see. "
The sponsor initially implemented
auto-enrollment in 2008 at a 3% default
deferral and, after experiencing few optouts,
raised it to 6% in 2013. " We chose
6% because that's the threshold that the
company match is based on, and we want
our employees to fully maximize their
savings, " Braun says. The plan has averaged
an opt-out rate of 9% among new
hires automatically enrolled over the past
three years.
22 PLANSPONSOR.com April-May 2018 Art by Chris Buzelli
TOTAL PLAN ASSETS/PARTICIPANTS:
$22.8 Million/327
PARTICIPATION RATE: 90.3%
AVERAGE DEFERRAL RATE: 8.06%
DEFAULT DEFERRAL RATE: 6%
DEFAULT INVESTMENT: T. Rowe Price
Target Date Funds
AUTOMATIC ENROLLMENT: Yes
AUTOMATIC ESCALATION: No
EMPLOYER CONTRIBUTION: 40% on 6%,
plus discretionary match of from
10% to 45% of 6%
Because the plan auto-enrolls at 6%
and matches 6%, the sponsor does not feel
it needs to implement a correlating autoescalation,
Braun says. " But we do educate
employees on utilizing the online feature
where they can voluntarily elect to set up
their own automatic increase, " she says.
Of the 250 employees actively participating,
32-i.e., 12.8%-have opted for
the increases. Braun expects to see that
number grow, as employees now can also
sign up for them at group education meetings.
" It used to be that, after the meeting,
they had to go online or make a phone call
to sign up, " she says. " Now, there's a piece
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