Beth Pattillo
Director, Retirement Programs
  • Total Plan Assets
    $8 billion
  • Participants
  • Participation Rate
  • Average Deferral Rate
  • Default Investment
    Vanguard Target Retirement Trust Select
  • Employer Contribution
    100% on 5%

Of the Leidos, Inc.
401(k) plan’s $7.5 billion in assets, former employees hold about 55% of that total, or $4.1 billion. The company sees an advantage to those assets staying, for both the plan and participants.

“Really, the benefit is that it helps keep our fees low,” says Beth Pattillo, director, retirement programs at the Reston, Virginia-based defense, aviation, information technology, and biomedical research company. “It gives us an opportunity to be in better share classes for our investments. And the higher asset base helps us to keep our administrative fees lower.”

The Leidos 401(k) plan has had a high percentage of former employees’ assets since its inception, Pattillo says. Leidos, formerly known as SAIC (Science Applications International Corp.), rebranded in 2013 when SAIC split into two companies. “When we had our split, Leidos kept all the terminated participants from the 401(k) plan,” she explains. “So we ended up having a significant amount of terminated assets from the beginning. But since then, it is an absolute decision on our part to support that population.”

“As we have looked at the plan from the split forward, that terminated population has been on our minds, as well as active employees,” agrees Taschia Tamakloe, vice president and director, corporate compensation. “So any strategy for the plan that we consider, it is always in our minds, ‘Is this going to impede that [former-employee] group?’

The plan has taken several steps to make it easier for former employees to keep their money in the plan. For example, Leidos allows participants to roll in other qualified accounts to the plan even after they leave the company. “It allows them to have a simple way to keep all their assets together, and it also simplifies their required minimum distributions,” Pattillo says.

And as of January 2018, the plan started to allow former employees who still have assets in the plan to take out a loan. The company originally thought of taking that step to make it easier for employees who’ve transferred to different joint ventures and subsidiaries connected to Leidos to take a loan. “But for our former employees we thought, ‘Why not allow them the choice to repay themselves rather than permanently reduce their retirement savings?’” Pattillo says.

Also, the plan has several distribution options: full and partial withdrawals; systematic withdrawals on a monthly, quarterly, semi-annual, or annual basis; and a Vanguard drawdown service.

All participants, including former employees, can utilize plan recordkeeper Vanguard’s drawdown service, which includes both education and 3(21) fiduciary advice. This gives participants the opportunity to get holistic advice about their retirement-income planning, Pattillo says. “We really think it is important to engage employees for their retirement planning, and to help them to get unbiased advice to make their decisions,” she adds.

Leidos has a paternalistic philosophy that influences its choice to have multiple distribution options, Tamakloe says. “We really want to help our participants for their entire retirement journey, whether they are in the accumulation or deccumulation phase,” she says. “By giving them these options, it might help them be better financial stewards of their money.”

—Judy Ward

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