Micro Plan Finds Provider That Simplifies Administration, Boosts Engagement

A plan sponsor finds that new options for micro plans offer more to participants and plan sponsors.

In 2001, non-profit Baltimore Curriculum Project began offering employees a 403(b) plan and participation was about 20% of eligible employees, says Angela Scott, human resource administrator.

Baltimore Curriculum Project is a non-profit organization that operates and manages four neighborhood conversion charter schools in Baltimore City: City Springs School, Govans Elementary School, Hampstead Hill Academy and Wolfe Street Academy. Scott says there are eight core employees in the main office in East Baltimore City, and there are other staff at the schools. Not all staff at the schools are eligible for the Baltimore Curriculum Project’s plan because they are hired by the school district and get benefits from the district.

In 2009, organization leaders wanted to improve participation. “The Board of Directors suggested we switch to a 401(k), so we searched for and chose a provider and started the 401(k),” Scott tells PLANSPONSOR, after which the participation rate did improve―to about 50%.

While moving to the 401(k) improved participation by eligible employees some, Scott says the plan provider did not offer access to employee account information, other than regular participant statements. In addition, Scott was still doing payroll set up of deferrals and filing the Form 5500 herself. “We started to wonder what we were paying for,” she says. Those involved with administering the 401(k) plan thought about the type of services it might benefit from—such as increased interaction from the provider with participants, and an easier to use back-end for the plan sponsor.

In 2015, one of the board members on the finance committee said his company was using small and medium-sized plan provider ForUsAll as its 401(k) plan provider, with great success. Scott says the plan committee looked into the provider and found it promising. After a Skype interview with people from ForUsAll, the plan committee decided that it wanted to switch its plan recordkeeping to the new provider.

NEXT: The Plan Conversion

The organization converted to ForUsAll as of August 1, 2015, and immediately saw plan improvements—both because of a new plan design and new provider, Scott said.

Now, there are 42 eligible employees and 38 participate―a participation rate of 90%. The plan automatically enrolls employees at a 6% deferral rate, and employees may choose to implement deferral increases of 1% annually. This has helped the average deferral grow to 7.4%, up from 6.5%

In addition to the participant improvements, Scott is pleased because ForUsAll handles enrollment and payroll deductions, as well as Form 5500 reporting. “Previously, I had to enter everything in payroll by hand. Now, after an employee’s one-year eligibility period is up, I get an email that someone is participating and that the deferral will be deducted from his pay. ForUsAll runs payroll reports and automatically debits deferrals,” she says. The plan provider also has offered fiduciary services. To top it off, switching providers has resulted in average employee fees for the plan dropping by two-thirds.

Participant Engagement

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Scott says one of the reasons Baltimore Curriculum Project decided to move to ForUsAll was ‘DAVE,’ the virtual adviser. He walks employees through every step of enrollment. “The ease of enrollment was one thing that drove up participation,” Scott says. “It takes about five minutes.” In addition, the technology shows employees how the company match―50% of up to 7% of pay―boosts their savings.

Esther Kim, senior content marketing manager at ForUsAll in San Francisco, says, even though participants are auto-enrolled, they are introduced to DAVE to understand the importance of savings and to build trust with the plan. She adds that on the employee dashboard, they can get information about all the funds in the plan and can schedule a time to talk one-on-one with an adviser―or along with their partner or spouse―at no additional charge. “They can talk about debt, leveraging health savings accounts (HSAs), transitioning into retirement and a wide range of other topics,” she says.

Overall, Scott says the decision to switch retirement plan recordkeeper has improved the plan exponentially.


NOTE: This article offers plan sponsors a chance to read about how a peer has worked on dealing with a particular challenge or plan issue. PLANSPONSOR shares these stories not to endorse a provider, vendor or approach, but to help plan sponsors learn from examples.