PLANSPONSOR - April/May 2019 - 41

2019
the 2008 through 2009 recession.
" We were trying to understand what our employees valued
about their benefits, " Lefton says of the survey, which found that
they valued the retirement plan and the company's contribution
toward it very highly. " That feeling wasn't just weighted to our
longer-service folks, " he recalls. " So we said, 'Why on earth is so
much of our contribution a discretionary profit-sharing contribution?
Let's shift our perspective.' We flipped from a 1-to-1 to
a 2-to-1 match, and that is not discretionary. We decided that we
can make a bigger commitment to our people upfront. "
The company made an offsetting reduction in the profitsharing
contribution, but the aggregate
contribution remained 18%.
Among new hires who get auto-enrolled
a walk-through of the company contribution, showing how
it works and how that high amount can lead employees to
substantial savings over a decades-long career, with footage of
young Kimley-Horn employees, talking about their retirement
hopes and dreams.
This January, the plan also added an in-plan Roth conversion,
with a nod to younger employees' strong interest in Roth savings.
Additionally, last year, Kimley-Horn started to contemplate
making an innovative move: auto-enrolling new hires into a
Roth contribution as the default, vs. the current use of pre-tax
contributions.
by Kimley-Horn, more than 80% stay in the
plan's default investment, McEntee says.
Last year, the plan converted its default from
a mutual fund to a collective investment
trust (CIT), as it moved to the T. Rowe Price
Target Date Trust. That change lowered
participants' net fee for the default investment
by 20%, from approximately 50 basis
points (bps) to 40 basis points.
A year ago January, the plan also moved to a more transThe
company has hired between
400 and 500 recent college
graduates in each of the past
two years, and over 45% of its
employees are aged 30 or younger.
" We hire a huge number of recent college graduates, and
parent fee approach and started to charge a flat, per-participant
quarterly recordkeeping fee of $22, or $88 a year. " We thought it
was fairer " than a basis-point fee, which varies based on a participant's
account balance, McEntee says. " Whether somebody's
balance is $100,000 or $1 million, he actually receives a very
similar level of service. " For participants invested in the several
plan options that still utilize revenue sharing, the revenuesharing
payments are rebated to them.
To help new Kimley-Horn hires keep their fees low, the
company pays the recordkeeping fee for their first two years on
the job. " When people are new to the plan and have a very small
balance, $88 can turn out to be 1% or more of their balance, "
McEntee notes.
Appealing to Young Employees
The leadership at Kimley-Horn believe it is crucial for young
employees to see the value of saving in the 401(k) plan. The
company has hired between 400 and 500 recent college graduates
in each of the past two years, and more than 45% of its
employees are aged 30 or younger. Partnering with recordkeeper
T. Rowe Price, the company has developed two videos to help its
recruiters communicate the plan's value to potential employees.
One of the videos, a four-minute presentation available on
YouTube, targets new college graduates, explaining that while
many companies offer retirement plans, not all plans are created
equal. It cites study data that Kimley-Horn's contribution is
four times the average for its industry. The video intersperses
that's the group that tends to be most interested in Roth, " McEntee
observes. " Younger employees' perception often is that their tax
rates are lower now than they will be later in their career, and they
are better off to pay the taxes on that money now and then withdraw
the balance tax-free when they retire 40 years from now. "
But Kimley-Horn would need to carefully communicate the
decision to all employees and make sure participants know they
can keep deferring on a pre-tax basis, McEntee says. " We would
have to be very clear that if what they prefer is the traditional
pre-tax contribution, they could absolutely make that change. All
they would have to do is go online or make one call to T. Rowe
Price, " he notes.
It is hard to say whether Kimley-Horn will decide this year
to go ahead with a Roth contribution as the default, McEntee
says. In part, the company would like to see a few more employer
clients of recordkeeper T. Rowe Price do it and learn from their
experiences. " It's a cutting-edge idea, " he says. " But it's under
strong consideration. " -Judy Ward
Nonprofit DC Plan >$500mm Finalists
Abbott Abbott Park, Illinois
Leidos, Inc. Reston, Virginia
Marvell Semiconductor, Inc. Santa Clara, California
Read the full finalist profiles on plansponsor.com/PSOY2019.
PLANSPONSOR.com April - May 2019 41
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