Markowitz Herbold PC

NOMINATOR COMMENTS

As a retirement plan adviser, I find myself benchmarking and evaluating existing and prospective client 401(k) plans regularly. After using a wide range of industry resources to benchmark plans against select employers several years back, we started comparing plan results with PLANSPONSOR’s Best in Class 401(k) plans. It is based on the results of this evaluation that I nominate the Markowitz Herbold 401(k) Plan.

Here are a few of the plan’s success measures: Participation has ranged from 98% to 100%; the average account balance is about $373,000; 40% of employees save to the IRS limit (as of 2023); the average pre-tax saving rate is 17.3%; the average Roth saving rate is 14%; and the plan includes a traditional after-tax with in-plan Roth conversion feature. Further, employees are eligible to participate, plus vest 100%, at age 20—no service requirement; the firm has an above-average retirement income adequacy score; and all employees who spend their career at the firm have a very high probability of retiring with dignity, given the magnitude of company support. The plan has consistently outperformed its benchmark over rolling time periods—eight of the last 10 calendar years.

PLANSPONSOR: Please cite any noteworthy initiatives you have taken in the past 24 to 36 months that have produced results to improve your plan, and describe the results.

Markowitz Herbold: The following initiatives over that time period have led to measurable success:

Expanded Retirement Saving Opportunities

• Benchmarked our retirement plan support package. We reaffirmed a 3% nonelective safe harbor contribution for all employees, a 50% match of all savings (including catch-up), and profit-sharing contributions ranging from 1% to 9% of compensation. We also moved the safe harbor contribution to per pay period, instead of annually, to get the money working for employees earlier.
• Implemented a backdoor Roth 401(k).
• Expanded our nonqualified deferred compensation offering. We introduced a deferred compensation program that lets high earners contribute an additional $100,000 in tax-advantaged savings.
• Evaluated legislative provisions. Under the SECURE [Setting Every Community Up for Retirement Enhancement] 2.0 Act, we’re exploring student loan matching contributions and new distribution options to further expand access to retirement benefits.

Enhanced Financial Wellness and Plan Engagement

• Expanded financial education. In partnership with Morgan Stanley at Work, we introduced quarterly education meetings, newsletters and a dedicated education microsite.
• Performed a targeted employee outreach. We focused efforts on increasing match utilization, addressing the fact that 60% of employees were not maximizing the employer match (due to the lack of a cap).
• Ensured investment diversification and risk management. We enabled employees to select from a range of actively and passively managed target-risk portfolios, to suit their personal investment needs.

Increased Retirement Readiness and Employer Support

• Set high employer contributions. The company’s 9.57% average employer contribution significantly enhances retirement savings.
• Achieved impressive participation and contributions. The plan maintains a 100% participation rate, and 40% of employees max out to the IRS 402(g) limit annually.
• Managed costs and maintained efficiency. We cover recordkeeping fees, and total plan costs remain in the lower range of the industry benchmark.

PLANSPONSOR: Is there anything else you would like to share?

Markowitz Herbold: By having taken full advantage of the plan’s offerings since joining the company in 2000, one employee is about to retire with $1.36 million in 401(k) assets.

This year, for our Plan Sponsor of the Year profiles, we are publishing Q&As based on the finalists’ applications and nominator comments. Responses are edited and may be paraphrased. In cases where the finalist self-nominated or, on its application, referred judges to the nomination for the answer, we have attributed those nominator answers to the plan sponsor.