PLANSPONSOR - April/May 2019 - 35

2019
contribution-split among about 300 employees based on a
safe-harbor Social Security integration formula-has averaged
$400,000 and last year totaled $600,000.
The company also does a true-up match at year-end that it
calls a " look-back match. " It ensures that participants who start
the year deferring at a lower rate, then raise it during the year,
get the match they deserve for the full year. For example, if a
participant suspends his contribution in the year's first half but
then adjusts it to 10% for the second half, he will get the full 5%
match for the year.
The plan utilizes
RetireView asset-allocation
models, which have a
hybrid approach that
takes into account both
age and risk.
A look-back match feature helps participants maximize their
contributions' value, Bear says, and he adds that Taylor Guitars
does not shy away from the additional match cost involved.
" These employees may have had to adjust their contributions
during the year due to a financial hardship. As a result, they were
not able to contribute at a consistent level all year long. We are
allowing an employee to 'look back' and recover lost opportunities
to get the match. "
Streamlining Investments and Fees
As Taylor Guitars made plan-design changes five years ago, it
also shifted to a more cost-effective approach to its investments
and streamlined administrative fees. " We did many things all at
once, " Bear recalls. " RBG [Retirement Benefits Group] has been
with us for a while as our adviser, and they talked to us, over
time, about all of the best practices they were seeing. So in 2014,
we started doing a bunch of them. "
Today, the plan's 17 investments have an average expense
ratio of 34 basis points (bps). The company says this compares
with an average expense ratio of 101 basis points for plans in its
asset range-i.e., $25 million through $49.9 million-according
to benchmarking data from " 401k Averages Book. " Bear points
to RBG's help in putting together the current investment menu's
mix of low-cost index funds and actively managed funds in
cost-efficient share classes. Using an open-architecture recordkeeping
platform also helps, he adds.
For its default investment, the plan utilizes RetireView
asset-allocation models, which have a hybrid approach that takes
into account both age and risk. Participants are defaulted into a
moderate fund for their target retirement date, and if they want
to change it they can talk with RBG about their risk profile. The
asset-allocation models automatically rebalance for participants
every 90 days, unless they opt out of rebalancing.
To eliminate the impact of revenue sharing, the plan utilizes
fee levelization, which it also implemented in 2014. Four of the
plan's 17 investments still use revenue sharing, and the amount
paid gets pooled and used to offset participants' administrative
fee. " We felt it was more appropriate in terms of cost-sharing
of the investments utilized by participants, " Bear says of the
change. Participants pay a fee of 5 basis points that covers recordkeeping
and custodial costs.
Targeted Education
An adviser from Retirement Benefits Group comes on-site for
two days at least twice a year for one-on-one meetings with
participants. " Our employees are able to discuss the retirement
plan and broader financial issues with RBG: They can
talk about things such as saving for a child's college education,
getting out of debt and budgeting, " Bear notes. " It's all paid for
by Taylor. We see it as giving them an opportunity to sit down
and talk with an unbiased financial planner, who has no other
incentive than to help them. "
In terms of other age groups of Taylor Guitars employees,
Principal benchmarking data shows that those 55 and older are
in the most danger of not achieving their retirement goals, Bear
says. Thirty-seven percent are on track to replace 70% or more
of their income-which at least considerably exceeds the 9%
benchmark for that age group in other Principal defined contribution
plans.
Taylor Guitars has a targeted education campaign in the
works, aimed at encouraging those employees to roll previous plan
balances into its 401(k) plan for purposes of consolidation.
Bear says, " I suspect that part of the issue with the older
age group is they did not start out working here at Taylor and,
therefore, saved a much smaller retirement balance to begin
with. Also, some of them have not moved over their balances
from their previous employers' plans to our plan, " he says. " We
will target those employees with education on the simple process
of doing this and walk them through how they can transfer over
their funds. " -Judy Ward
Corporate 401(k) $25mm - $50mm Finalists
LLOG Exploration Company, LLC Covington, Louisiana
OneAZ Credit Union Phoenix, Arizona
Smithers-Oasis Company Kent, Ohio
Read the full finalist profile on plansponsor.com/PSOY2019.
PLANSPONSOR.com April - May 2019 35
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