PLANSPONSOR - December 2021 - January 2022 - 40

PLAN PROFILE
In Need of a (New) Plan
Sponsor used the Voluntary Corrections Program to change plan types
W
hen Inventory Trading
Company (ITC) was
incorporated in 1993,
the business model was to buy bulk
clothing and sell it at tent sales in
Minnesota. Today, that business has
changed, notes General Manager
Carol Engelken, and the company is
now known for selling its Hero247
garments, custom-manufactured
for police, fire and sheriff departments,
corporate businesses and FBI
security staff, in addition to X-Grain
Sportswear.
The company outgrew the
SIMPLE [savings incentive match
plan for employees] IRA [individual
retirement account] retirement plan
in place since 2004. " It worked well as
a startup plan, with fewer administrative
costs, " Engelken says. However,
the plan allowed only for a maximum
of 100 eligible workers. " We have two
companies with two separate tax IDs.
Common ownership was a stumbling
point that led to the need for a voluntary correction. "
The company had failed to offer all employees access to the
potential providers, and, thanks to
Zoom, the group kept the changeover
rolling when the pandemic began.
" Adding this to the new processes we
had to put in place for the pandemic
was brutal. We wanted to get the plan
up and going for the employees-to
have no plan wasn't an option. "
The new 401(k) plan was set up
with Empower as the recordkeeper
and DWC as the client's third-party
administrator (TPA). The committee
chose a safe harbor qualified automatic
contribution arrangement
(QACA) option and automatically
enrolled employees at 6%, which
provides them the full 3.5% match.
While converting the plan,
Carol Engelken, general manager,
Inventory Trading Company
Engelken says, the company also
converted the payroll system. " The
payroll processor we chose integrated
with the systems within the 401(k). "
All told, the setup for both plan and
payroll systems and the SIMPLE IRA
correction took several months, she
retirement plan. According to ITC's new adviser, after a complete
accounting analysis in January 2020, the 65 employees not
covered by the plan were given a corrective contribution, and the
SIMPLE IRA was discontinued.
It was determined that ITC should move to a 401(k) plan.
Engelken says a committee was established internally to interview
SNAPSHOT
PLAN SPONSOR: Inventory Trading Company, Peosta, Iowa
KEY PLAYER: Carol Engelken, general manager
PLAN: 401(k)
NUMBER OF EMPLOYEES: 100 - 175, including part-time workers
AVERAGE DEFERRAL RATE: 5%
PARTICIPATION RATE: 91%
recalls. " It was definitely a trying year, making sure everything
was running correctly, besides keeping our employees safe. "
Employees had mixed emotions, Engelken says. " Mostly,
they wanted to invest and get the company match to ensure their
retirement saving continued. " With the 401(k), employees could
earn a 3.5% company match vs. the 3% they had had with their
SIMPLE IRA, she says. " Many were open to transferring their
funds to the 401(k), and some just wanted to leave [their money]
where it was and start a new account with the 401(k). "
The pandemic delayed implementation until October
1, 2020. ITC waited until the Iowa state mandates allowed
employees to meet in person, so they could learn about the new
plan. Once they targeted October 1 as the installation date, they
needed to coordinate space and attendees.
This worked out to be eight group sessions and one web-based
meeting. However, the provider's website failed to be live on time.
The next couple of weeks, ITC's adviser was on-site, helping
each employee self-enroll, via an iPad. Employees were walked
through the website. If they had their smart phone, they were taken
to the website using their phone, as well. -Judy Faust Hartnett
40 PLANSPONSOR.COM December 2021 - January 2022
Art by Chris Buzelli
http://www.PLANSPONSOR.COM
PLANSPONSOR - December 2021 - January 2022

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