PLANSPONSOR - February/March 2021 - 22

AWARDS | 2021 PLANSPONSOR BEST IN CLASS 401(k) PLANS
then that company may work on building a plan that is more
complex than the average-e.g., with a larger number of investments,
a brokerage window, more equity investments, more
mutual funds and more mutual fund tiers.
On the flip side, Robinson says, " If you're a plan sponsor
mainly with people less active in the plan, you may have a smaller
investment lineup. Therefore, you put more energy toward the
QDIA [qualified default investment alternative], making sure it
is reflective of your workforce-that it has easier-to-understand
investments and fewer investment tiers. Your loan provisions
might look different-you might now have loan provisions. " The
plan might or might not use automatic enrollment or automatic
escalation. Such decisions are based on how the sponsor thinks
its employees will respond, she says.
But no matter the plan population, there are core essentials.
Automated features are an example of plan design options that
factor heavily into Best in Class qualification. Auto-features actually
often build on each other, creating more and better opportunities
for saving. What tends to happen, Lucas says, is sponsors
adopt auto-enrollment and eventually realize that the default rate
they chose was low and that participant deferral amounts have not
budged. The sponsor then, a few years later, implements autoescalation
and eventually considers re-enrollment. " I think it does
tend to be stepwise, because sponsors want to see how people will
react, " she says. " But, on the whole, plan participants don't push
back, so sponsors can look back at the experience and consider
holistically what makes sense for their plan. But it doesn't make
sense to add all of the auto-features at once. "
After a retirement plan's foundation is set, the employer
needs to implement more plan features and to add some to its
stockpile of resources. That will likely mean it needs to invest
in plan improvements such as adding supplemental savings
plans and retirement income options, for instance. Not all plans
may have the resources necessary to achieve all goals, but these
features help the plan and its participants reach greater heights.
" I think plan sponsors have been responsive to workforce
requests: Take environmental, social and governance (ESG)
investing, for example, or retirement income, " Robinson says. " But
there are still further changes that will be needed as the workforce
population changes and as participants themselves change. "
According to Lucas, how plans develop ultimately depends
on employees' financial wellness. " More employers are focusing
on the balancing of future financial security with current financial
health, incorporating into the plan more solutions that help
people be in a more financially secure place today. What they
don't want is for people to be struggling while looking really good
on paper in their 401(k). They want that balance. "
PLANSPONSOR is pleased to announce the seventh " class "
of companies recognized as Best in Class 401(k) Plans. Since its
inception in 2014, notes Brian O'Keefe, vice president, research
at PLANSPONSOR, those recognized as Best in Class plans have
always been " leaders " in taking on plan design features that
contribute to positive plan and participant outcomes. In some
cases, such as Roth deferrals, BIC plans were somewhat capped
in adoption, so non-BIC plans are rapidly catching up. As to other
plan features such as immediate vesting, BIC plans are extending
their lead, and in still others-fee equalization, quarterly investment
review, financial education-the two are increasing at
roughly similar rates. This, O'Keefe says, reflects that, in general,
all plans are getting better, but BIC plans have a head start.
The 20 plans that qualify this year as " Best in Class " are
identified in the following pages. In addition, comparisons of
Best in Class Plans vs. Other Plans follow. Like all benchmarks,
especially in an industry as continuously evolving as that of
employer-sponsored retirement plans, the standards for " Best
in Class " are subject to change each year. (See Methodology.)
This was also the year that those receiving the Best in Class
designation in 2016 needed to requalify to keep their status.
For extensive profiles of this year's honorees, go to plansponsor
.com/awards. -Judy Faust Hartnett
METHODOLOGY. The 2021 Best in Class (BIC) 401(k) plans were selected from the 2,825 401(k)
plans that responded to the 2020 PLANSPONSOR Defined Contribution (DC) Survey. Also,
because plans must requalify every five years to maintain their Best in Class status, the 26 plans
honored in 2016 were likewise reviewed. All were then rated using a proprietary scoring system
that weights usage of more than 30 attributes related to plan design, oversight and governance.
The variable scoring system seeks to reward plans for practices that are positively correlated with
improved participant and plan outcomes-e.g., plans with immediate vesting receive the highest
score, while plans with one-year vesting schedules receive higher scores than those with longer
schedules. Only plans that exceed the established benchmark are recognized as Best in Class, this
year's honorees joining the list of 128 prior winners-from 2017 through 2020-in receiving the
Best in Class designation. For a complete list, visit plansponsor.com/awards. To be considered
for the 2022 Best in Class 401(k) designation, please email surveys@issmediasolutions.com to
complete our annual PLANSPONSOR DC Survey.
22 PLANSPONSOR.COM February - March 2021

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PLANSPONSOR - February/March 2021

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