2015 2015 PLAN SPONSORS OF THE YEAR
Corporate 401(k) <$50MM

Showplace Wood Products, Inc.

FINALIST

PARTICIPANT COACHING: In 2013, Showplace Wood Products, Inc., decided to look closely at whether the company’s 401(k) plan ultimately could provide enough retirement income for employees. Its study found that many among the largely blue-collar work force lagged on savings, because they either did not participate or participated but deferred too little. The $8.6 million plan then had a stagnant 56.5% participation rate and average deferrals of just 2.5%.

To address this, the company last year made plan design changes to improve employees’ retirement readiness, and participation now stands at 95%, while average deferrals have grown to 4.1%. “Many employees hadn’t made good choices,” says Emery Lee, chief financial officer (CFO) of the cabinet maker, in Harrisburg, South Dakota. “We’re trying to coach them and help them.”

A year ago January, Showplace started automatically enrolling new employees at a 3% initial deferral and implemented an auto-increase of 1% up to 8%. The company matches 100% of the first 3% of pay an employee defers, then 50% of the next 2%, for a potential 4% employer contribution. Additionally, all employees start participating in the company’s 100% employee-owned employee stock ownership plan (ESOP) after they have worked 1,000 hours; the company’s contributions vary annually but average 7% of an employee’s pay. Therefore, an employee with more than 1,000 hours logged who contributes 5% of pay to the 401(k) gets a 4% match and an employer ESOP contribution averaging 7%. In that case, an amount equal to 16% of an employee’s salary goes into tax-deferred investments annually. 

A personalized education approach has helped win over the plan’s 337 participants. Even before Showplace rolled out the changes, it had mandatory group sessions and optional one-on-one meetings for existing employees, and the company has continued to do individual meetings for new hires. The plan’s adviser, Alliance Benefit Group LLC (ABG), held the meetings, which happened on-site and during work hours. Employees got a customized retirement-preparedness projection of their retirement benefit at age 65 and could ask questions.

“We wanted to coach people that if they will put away a little bit at a time, over time they will see it really grow,” Lee says. “We were trying to help them understand that you’ve got to put a little ‘skin in the game,’ so step up and put in 4%, 5% or 6%.”

Those one-on-one meetings got results: 42% of participants who attended increased their contribution by an average 3.3% of pay.

Employees now get a personalized report each quarter. Says Lee, “We’re trying to keep that information in front of them.”

Judy Ward

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