Participants | Published in April 2000

John Shappell, 56, Wants a 401(k) Plan

John Shappell says he is counting on some help from the $2.6 million profit-sharing plan sponsored by his employer, Potteiger-Raintree of Glen Rock, Pennsylvania.

By Randy Myers | April 2000

John Shappell says he is counting on some help from the $2.6 million profit-sharing plan sponsored by his employer, Potteiger-Raintree of Glen Rock, Pennsylvania. "But do I really think I'll have enough [to retire on] as things stand now? I would probably say no."

"I think our profit-sharing plan is pretty decent," Shappell emphasizes, "especially since I don't pay anything into it. But, I think it might be better to have a 401(k) plan in which the company matched our contributions. Eventually, I think that will happen, because our company just merged with nine other roofing companies across the country to form a much larger company (TECTA America Corporation), and I believe it will probably have a 401(k) at some point."

Shappell has been at Potteiger-Raintree for the past nine years. The company is a commercial roofing contractor that operates throughout the mid-Atlantic region. A lifelong roofer and sheet metal mechanic, Shappell is the company's service manager, a post that involves selling service contracts and handling service work. He earns $60,000 a year, plus a bonus when company profits warrant it. He anticipates staying on the job for at least another six years.

Because his employer's profit-sharing plan is dependent upon the company's profitability, Shappell says he never knows how much will be contributed to his account in any given year. But he says that, right now, he has a balance of about $40,000, and that he believes the company has been generous with its plan.

Potteiger-Raintree President Tom Potteiger confirms that the company has total discretion in determining whether it will contribute to the plan each year and in determining the size of any contribution. Once it does decide to make a contribution, the company allocates the money to the accounts of each participant according to a formula tied to salary. For example, an employee whose salary represented 4% of the participant's total payroll would receive 4% of that year's contribution to the plan.

The company launched its profit-sharing plan in 1983, and uses a third-party administrator to manage it. About 42% of the plan's assets are invested in a core large-cap domestic stock fund, and another 46% is invested in four other stock portfolios, including a small-company fund, a telecommunications fund and a biotech fund. About 10% of the fund is invested in bonds, and the balance in cash.

Shappell has relatively modest plans for his retirement. He would like to golf, do a little traveling with his wife of 36 years, Kathryn, spend time with his grandchildren and do some volunteer work. "I'd like to retire at 62," Shappell says, "or maybe semiretire. If I could work for the company seven, eight or nine months of the year, and then take a few months off, I would consider doing that, too. I guess it all depends upon how I feel at that time."

Fortunately, the profit-sharing plan at Potteiger will not be his sole source of retirement income. Having spent many years as a member of Sheet Metal Workers Local 19 out of Philadelphia, Shappell expects to draw a pension from that organization, too. If he retires at age 65, his benefit from that defined benefit plan would be $577 per month. It would be less if he began to draw on the pension at age 62.

Shappell also counts on receiving a Social Security benefit of about $1,090 per month if he does choose to retire at age 62, or about $1,500 a month if he doesn't start drawing a benefit until the age of 65. The numbers come from an earnings and benefits estimate statement he received recently from the Social Security Administration. He also expects his wife, who has worked at a variety of jobs over the course of their life together, to receive Social Security benefits, though somewhat lower than his own. Finally, Shappell has a modest IRA account of about $28,000, split evenly between two Vanguard mutual funds, Windsor and the Vanguard Index 500 fund.

He also has an ownership interest in the building that houses Potteiger-Raintree. (The firm leases the building from Shappell and the other owners.) "I also just bought 2,500 shares of a small dot-com company, and I'm hoping that turns out to be a decent investment," he says.