HEADQUARTERS: Gahanna, Ohio
TOTAL PLAN ASSETS/PARTICIPANTS: $1.9 million/60
PARTICIPATION RATE: 96.5%
AVG. DEFERRAL RATE: 7%
DEFAULT DEFERRAL RATE: Not Applicable
DEFAULT INVESTMENT: Not Applicable
EMPLOYER CONTRIBUTION: Match of 100% up to 3% and 50% of next 2%
ADDITIONAL RETIREMENT PLAN: Not Applicable
“We believe that employees saving for retirement is as important as the work we do as a company,” says Mark DeBellis, president of Gahanna, Ohio-based Suburban Steel Supply Co. That philosophy led to a January 2015 move to a safe-harbor design for the $1.9 million plan at the supplier of structural steel to commercial and residential markets.
“When we were educated on the safe-harbor plan and benefits, we saw it as a natural enhancement to what we were currently doing,” DeBellis says. “As our results show, the enhancement has increased the likelihood that our employees will have enough retirement income through their efforts and this plan.”
Although the plan did not auto-enroll employees, results have come quickly. “We have increased participation to 96.5%, compared to 71.5% a little over a year ago,” Chief Financial Officer Jenny Demko says. “And our average deferral rate is 7%, up from 6% just prior to the safe-harbor plan implementation.”
With the safe-harbor change came higher match costs: Suburban Steel previously matched 50% up to 6% of pay, and now matches dollar-for-dollar up to 3% of compensation, plus 50% of the next 2% deferred, for a potential 4% contribution on participant deferrals of 5%. Contributions also vest immediately. Says DeBellis, “Quite candidly, we cannot think of a better way to help our employees invest in themselves.” The need to pass nondiscrimination testing did not motivate the move, Demko says, explaining that the plan has never had testing issues.
The participation and deferral boosts came not just from offering a higher match, but putting focus on employee education as the plan moved to a new adviser, Westerville, Ohio-based Retirement Plans, Inc. “At the same time we were introducing our employees to the plan-design change, we also were introducing them to our new plan advisers,” Demko says. “And we felt the acceptance and success of both were highly interdependent.” So the employer asked the advisory firm to create a communication piece giving a sneak-peak of the plan changes ahead, and Suburban Steel distributed it as a cover letter to the required participant disclosure.
A few weeks later, adviser Rich Ritter led a monthly employee town-hall meeting, outlining the safe-harbor plan benefits of an enhanced matching contribution and immediate vesting. He also talked about real-world examples of how putting aside a little money every pay period now can stack up to big savings in the future, Demko says. About a week later, each employee met with the advisory firm during work hours for an individual education session tailored to their needs, she adds.
And Suburban Steel has decided to take another step in helping employees save for retirement: Starting this year, it has built into the plan design a potential discretionary profit-sharing contribution to participants’ 401(k) accounts. (The amount has not been determined.) As for the cost of doing that, DeBellis says, “We are still a small, privately held company, and we establish yearly, realistic financial goals for our business. When those results exceed the expectations, the profit-sharing enhancement will be one of the methods we use to share that success with all our employees. After all, it requires all of us working together to achieve those results.”
« 2016 PSOY – RL Worth & Associates