PLANSPONSOR - June/July 2021 - 19

2021 PLAN SPONSOR OF THE YEAR WINNERS | BEST PRACTICES
Total Retirement Offering
North American Lighting
Paris, Illinois
P
articipants in the 401(k)/profit-sharing plan
of North American Lighting, Inc. (NAL), have
a big head start on saving enough for their retirement:
They have been getting an 8.5% employer
contribution to their accounts virtually annually.
This Paris, Illinois, manufacturer of vehicle
lighting makes a 3% nonelective contribution,
plus it shares profits to the amount of 5.5% of
pay most years. " From a strategic standpoint,
our retirement plan is an important part of our
efforts to attract and retain good employees, " says
President and Chief Operating Officer (COO)
Kirk Gadberry. " One thing I often say to our
employees is that, for us and for our competitors
in the industry, we are in similar buildings with
similar equipment and in similar geographic
areas. The thing that differentiates us is our
people. I see that sizeable expense as an investment
in our team. "
North American Lighting offers three
retirement plans: a 401(k)/profit-sharing plan, a
nonqualified plan and a deferred compensation
plan. It has had the nonqualified plan for about
20 years, making it available to senior-level
managers. " As their income increases, if they're
maxing out their 401(k) contribution, it becomes
harder for them to save enough to sustain their
income in retirement, " says NAL Total Rewards
Manager John Key. " The nonqualified plan was
created so these individuals could put post-tax
dollars in their account. "
The deferred compensation plan was
started in 2019, for NAL leadership executives.
" As we look to the financial future for our
executive team, this [plan] allows them to defer
their bonuses, " Key says. " It gives them another
outlet to set themselves up so they can have a
sustainable financial future. "
The 401(k) plan automatically enrolls new
employees at 6% and automatically escalates
them 1% a year up to 10%. So even in the first
year of participating, an employee usually gets a
9% total-i.e., employer plus employee-contribution,
and that rises to 18.5% over the next four
years. Profit sharing goes into effect after 12 to
18 months, depending on the person's hire date.
" NAL has had the 3% nonelective contribution
for a long time, " Key says. " We encourage
employees to contribute a minimum of 10%
of their pay to their retirement account every
year, but not all of them do that. " By making a
contribution whether or not an employee does,
he says, the company helps the person make
progress toward being able to retire on time and
enjoy his retirement.
The profit sharing is a discretionary amount
that has been 5.5% of eligible wages-i.e., base
pay-for 24 of the past 26 years. That contribution
dipped to 2.75% in only two years, one being
last year, but the company anticipates a return to
5.5% profit sharing for 2021.
" We have many employees who have been
with us 20 or even 30-plus years, " Key says. Long
employee tenures make sense to achieve manufacturing
precision, in order for NAL's products
to maintain their market-share leadership, he
says. " Even for an entry-level position here, you're
talking about six months to a year of training,
to become proficient. For other positions here,
proficiency could take years. "
North American Lighting decided to start
covering all of the administrative expenses
for the 401(k) plan, effective last year. By its
paying for both recordkeeping and advisory
services, NAL saved participants about $100
each in administrative fees, at a total cost to the
company of $600,000, Key says.
NAL's decision to start paying administrative
fees is consistent with the recent trend
among leading-edge employers, says Mark Fry,
who serves NAL in his role as a senior relationship
manager with Principal Financial Group,
which recordkeeps the company's three plans.
" This is an avenue they can take to reduce
litigation risk, " he notes. " More importantly,
that money is not coming out of participants'
accounts. It allows their balances to continue to
grow more, over time. " -JW
Finalists
Durham Public Schools
Durham, North Carolina
Farm Credit Foundations
St. Paul, Minnesota
More on PLANSPONSOR.com/
awards/2021-plan-sponsor-year
John Key,
Total Rewards Manager
By its paying
for both
recordkeeping
and advisory
services,
NAL saved
participants
about $100
each in
administrative
fees, at a total
cost to the
company
of $600,000.
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PLANSPONSOR - June/July 2021

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