To ensure success, this plan sponsor sticks to the 90-10-90
objectives and regularly reviews all facets of its plan.

HEADQUARTERS: Spirit Lake, Iowa

TOTAL PLAN ASSETS/PARTICIPANTS: $20,265,000/ 201

PARTICIPATION RATE: 96%

AVG. DEFERRAL RATE: 8.65%

DEFAULT DEFERRAL: Not Applicable

DEFAULT INVESTMENT: Fidelity Freedom TDFs

EMPLOYER CONTRIBUTION: 50% match of 6% deferral plus 5% ESOP contribution

ADDITIONAL PLAN: Not Applicable

At Spirit Lake, Iowa-based Bank Midwest, employees come first. “We have a great company culture that is all about our employees,” says Mary Kay Bates, president of Bank Midwest. “Within that culture, benefits and compensation are two ways to take care of employees, but our retirement plan helps make our employees prepare for retirement and to successfully retire.”

Bank Midwest is a family-owned, community-oriented diversified financial services company with 11 locations throughout Iowa, Minnesota and South Dakota. The Goodenow family is in its fifth generation of leadership.

Bates says “When we onboard new employees, we immediately engage them with the 401(k) plan, and within the first quarter of employment, we make sure they’ve met with one of our bank advisers to be sure they understand how important saving for retirement is.”

To help achieve their “90-10-90” goals (90% participation, 10% contribution rate and 90% receiving investment advice), Bank Midwest provides participants a match of 50% on a 6% deferral in addition to a 5% ESOP contribution. With an average deferral rate of 8.65% into the plan, an average employee has contributions of 16.65% for retirement. Currently, more than 95% of participants choose a risk-based diversified model portfolio over the plan’s investment target-date fund default.

In addition, Bates says “we meet our objectives by reviewing plan design features, funding decisions, and employee education, and complete an in-depth review of all costs of the plan on an annual basis,” Bates says.

Alliance Benefit Group (ABG) serves as Bank Midwest’s ERISA 3(21) co-fiduciary advisor/consultant for the retirement plan. After several years serving as its adviser, Brad Arends, CEO of ABG, located in Albert Lea, Minnesota says, “We wanted them to focus on more than funds, fees and fiduciary issues—we wanted them to define success differently beyond that.” The adviser encouraged the sponsor to start examining readiness metrics.

”Beginning in 2010, ABG began producing retirement readiness reports for every participant, combining the 401(k) and the ESOP,”, which prompted many participants to make changes, says Arends. The adviser also produced an aggregate report, without names, so the bank could benchmark the plan by retirement income.

Alerus Financial recently acquired the recordkeeping division of ABG and serves as Bank Midwest’s recordkeeper. Although the plan is not set up to auto enroll employees, auto escalation is one click away on Alerus’ website.

Bank Midwest benchmark replacement ratios are based on income, with, for instance, a goal of 90% replacement ratio for lower wage earners and 70-75% for upper-income employees. The average retirement income replacement ratio gap for all employees is within 15% of that goal, and the average employee under the age of 40 has less than a 5% gap.

As the company continues to grow, acquiring new banks or financial groups, Bates says it will meet the challenge of delivering face-to-face, quality education and communications at the level that it has done in the past with the help of in-house advisers and ABG. —Judy Faust Hartnett

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