Gerald R. Erickson

“Gerald has always worked above and beyond to keep our plan on the cutting edge to benefit our participants,” says Terry Hayden, chairman of the Plumbers & Steamfitters Local 434 and MCA Supplemental 401(k) Plan in Mosinee, Wisconsin. “Bottom line, Gerald has always taken the time and personal interest in our retirement plan to make sure our board members and participants are well-served.”

Hayden assumed the chairman role for the Local 434 defined contribution (DC) plan in 2003, about two years before the relationship with Milliman and Gerald Erickson, principal and benefits consultant with the firm, kicked off. At the time, recordkeeping was outsourced to accounting firm LarsonAllen. “They remained our recordkeeper for my first few years, until they decided to exit the Taft-Hartley business,” Hayden explains.

After a thorough request for proposals (RFP) process, “Milliman ultimately stood out for us,” Hayden says. An unanticipated bonus of contracting with the firm quickly became clear through the dedicated and skillful onboarding work driven by Erickson, Hayden says. Erickson’s work was not at all compromised by the complexity of the Local 434 401(k) plan, which operates under the Taft-Hartley multiemployer plan legislation and features some 150 contributing employers, ranging from large blue-collar firms to boutique contractors with a handful of employees.

“Gerald immediately understood the purpose and design of our wide-reaching plan, which allowed him to lead the way to implement customized target-date funds [TDFs] using the open-architecture approach,” Hayden says. “During this process, he took serious time outside the normal board meetings to answer questions and address concerns throughout the entire transition away from a single-provider TDF series. He constantly made himself available.”

The results of the move to custom target-date fund portfolio overlays built on a streamlined fund lineup are compelling, Hayden and Erickson note.

“At the middle of last year, we calculated that we had created up to a 200-basis-point [bps] improvement in long-term returns for people using TDFs in the plan, compared with the earlier proprietary option we had been offering,” Hayden says. “We used to have about two-thirds of the plan population invested in less than three funds—they weren’t diversified properly. Today that number is down to 4%.”

Hayden adds that Erickson also helped the plan committee realize it was creating unnecessary complexity by operating on a plan year not in line with the calendar year. This can be especially problematic for multiemployer plans, Erickson explains, because small employers and contractors may have difficulty compiling compensation data on an off-calendar-year basis. Besides hindering an honest look at plan performance, compromised payroll data leads to actual deferral percentage (ADP) testing mistakes and can jeopardize the tax-qualified status of such a plan.

“Gerald has helped the committee really dig deeply into the numbers for the ADP testing in a way none of us had seen before,” Hayden continues. “He understands that we are unique in that we are a multiemployer plan with a pretty strong concentration of older and higher-income workers across our participating employers. This always made ADP testing a huge struggle—until Gerald helped the plan get creative in the way we dig into our data and present the results for our required testing. He has a really sophisticated understanding of how to pull the data together for success.” —John Manganaro