2022
Corporate DC >$150MM – $250MM

Henderson Engineers, Inc.

FINALIST
Lenexa, Kansas
Shane Lutz
Principal
  • Plan
    401(k)
  • Total Plan Assets
    $177.5MM
  • Number of Participants
    1,099
  • Participation Rate
    94%
  • Average Deferral Rate
    10%
  • Default Deferral Rate
    9%
  • Default Investment
    Prudential GoalMaker
  • Automatic Enrollment
  • Automatic Escalation
  • Employer Contribution
    100% of 3% + 50% of the next 3% +25% of the next 3%
  • Providers
    Recordkeeper: Prudential Financial; Adviser: UBS
  • Financial Wellness Educator
    UBS


Henderson Engineers, Inc., a 52-year-old engineering and building construction consulting company, in Lenexa, Kansas, has grown steadily and continues to improve its 401(k) plan. The plan has a 94% participation rate and an average deferral rate of 10%. Automatic enrollment defaults new hires into the plan at 9% of compensation, which makes them eligible for the full tiered match. “We want the 401(k) to be always changing and keeping up with the times,” says Shane Lutz, a design and construction executive and long-time member of the 401(k) committee. “I just celebrated my 25th anniversary there, and we’ve grown consistently every year.”

Prior to 2016, back when people had to join the plan voluntarily, the participation rate was already 90%. “It was ingrained in Henderson’s culture to participate and take advantage of the plan even before auto-enrollment,” says Matt Bret, senior vice president, wealth management with UBS Financial Services, and an adviser on the plan for 20 years. “The firm was ahead of its time.”

The 401(k) committee debated the default to set before implementing auto-enrollment. At the time, 3% was common for a default deferral rate. “But, unanimously, the committee said, ‘If we were hiring our kids, what would we advise them? We’d advise them to save 9%, to take full advantage of the match,’” Bret recalls. “I thought that was extremely bold. At the time, you weren’t seeing a lot of automatic enrollment that high, but the [sponsor] had a lot of foresight. It wanted to make sure every person got the highest match,” he says, referring to Henderson’s long-time 9% tiered formula.

Henderson was also ahead of its time by, in 2007, offering a Roth 401(k) option, enabling participants to build tax-free savings for the future. “Forty percent of the participants at Henderson are saving in the Roth, and it’s a huge portion of the plan,” says Bret. The firm began offering in-plan Roth conversions about two years ago.

The success of these features can be attributed in part to Henderson’s strong focus on financial education—helping employees understand the value of the 401(k) and explaining complex tax and investing concepts.

“Every year, we set a schedule of what we want to accomplish with education,” Bret says. “The enrollment meetings are a staple, every quarter, and we set up learning sessions, which are at a higher education level. These topics vary, and we look for feedback from Henderson,” says Bret. He also covers timely topics, for instance sending communications to participants about inflation’s impact and how to manage it.

“We have a speaker series and webinars to engage employees; we also offer free financial coaching—UBS employees who are licensed and don’t solicit. They simply are a coach a participant can reach out to like a fitness instructor. They’ll run through an assessment and see where you’re at and set goals,” Bret says.

The firm has over 1,000 employees, in offices from New York City to Los Angeles; the average age is about 36, Lutz says. Some are just starting in their career and can benefit from the UBS financial wellness program that focuses on people’s finances today. Budgeting, dealing with student loans and paying down credit card debt are a few of the topics. But other employees, such as Lutz himself, have been with the firm for 20 years-plus and want help with retirement planning. For them, UBS offers a checklist to help them prepare for retirement and provides education on caregiving, saving for kids’ college, and drawing Social Security and Medicare benefits.

“One thing that has driven our success is our investment in our people, giving them opportunities for meaningful careers and a work-life balance, for taking home a paycheck and preparing for retirement,” Lutz says. “Investing in the whole person is a big philosophy we have here, and that kind of perpetuates itself. You create a good culture, take care of clients, and the 401(k) is one of the many benefits we’ve invested in and put a lot of effort into.”

The company had to overcome adversity and rebuild trust in the 401(k) plan after a bad experience. Twenty-five years ago, previous company leaders invested plan assets with an individual who committed fraud on the plan. The plan was fully restored, but the company learned about the importance of having a strong, diverse governance committee and of vetting financial partners.

“When that happened, it was a big black eye,” says Lutz. “We had to make things right; those accounts were compensated and adjusted accordingly, which we had to do to rebuild that trust.” The 401(k) committee became much more intentional in its oversight. “We meet on a regular basis, and we brought in good talent such as Matt’s team, to get sound outside advice,” Lutz says. “We’re always vetting out the investment opportunities and options and the diversity of funds that people can [choose].”

One new goal being explored is to find environmental, social and governance funds that are good for the 401(k). “We’re engineers and in construction, and everything about sustainability is right up our alley; we can have a tremendous impact in that space,” Lutz says. “The committee said let’s give our employees the opportunity to put their investments in more socially minded opportunities.” It had several ESG money managers speak to the 401(k) committee before it added some new funds to the plan lineup.

Another new development is that Henderson became an employee stock ownership plan firm in November 2021; this is another way of rewarding employees. “Everybody becomes an owner, rather than a select few,” Lutz says. “It’s something we had been researching and looking into for years, and it seemed like the right thing to do.”

Kimberly Langford
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