Standard Process Inc.

Standard Process Inc. (SP) converted from a money-purchase pension plan/profit- sharing plan to a 401(k) safe-harbor/profit-sharing plan in July 2017. Before that, not much had changed in the plan’s design since its 1952 launch.

“We wanted to modernize the plan,” Human Resources Manager Kristi Sokol says of the Palmyra, Wisconsin-based maker of nutritional supplements. “The plan was a very traditional pension and profit-sharing plan, and it had some rules and plan-design features that were a little limiting and confusing to our employees.”

With the changes, SP wanted to offer employees more options, Sokol says. “The way our plan design was set up before, for example, they could only defer a fixed 3% of pay: They could not save any more, or any less. We constantly had employees ask us, ‘I really want to save more. Why can’t I?’”

The SP plan also previously had quarterly enrollment. “Now, employees become eligible to participate on day one of their employment with us, and they are auto-enrolled at a 5% deferral rate,” Sokol says. “We also introduced auto-escalation at 1%, up to 15%.” The company still puts in a 5% match, and the changes have been cost-neutral to SP, she says.

Participants also now can choose to have their contributions made on a before-tax basis or a Roth basis. “Before, participant contributions could only be made to the plan on an after-tax basis,” Vice President of Finance Steve Ryan says. “The feedback we had on the plan was that there was a desire for participants to make pre-tax contributions.”

And previously, the plan did not allow loans or hardship withdrawals. With the changes, the plan introduced the ability to take a hardship withdrawal, but it still does not allow participants to take a plan loan. “We felt that if they were taking loans, it would be more likely that they wouldn’t be ready for retirement,” Sokol explains.

The rollout of the modernized plan explained the benefits of the changes for Standard Process employees. “We held town hall-style meetings,” Sokol says. “The way we marketed the changes to employees is that this was an enhancement, and now the plan has a lot more options and features.” For employees with questions about their specific situation, the plan’s adviser, Brookfield, Wisconsin-based Francis Investment Counsel LLC, comes onsite two times a year and provides participant-level fiduciary advice and education.

Standard Process continues to make a profit-sharing contribution to the plan, and that contribution goes directly into an employee’s 401(k) account. “There is a long track record of us contributing every year, and that component was important for us to keep in the plan,” Ryan says. “It’s a discretionary contribution, but that has been habitually generous, and it remains that way. It is often 10% to 15% of employees’ eligible wages, and it goes a long way toward helping our participants secure their financial future.”

—Judy Ward