PARTICIPATION RATE: 97.9%
AVERAGE DEFERRAL RATE: 7.2%
DEFAULT DEFERRAL RATE: 4%
DEFAULT INVESTMENT: T. Rowe Price Retirement Trusts, Class B
AUTOMATIC ENROLLMENT: Yes
AUTOMATIC ESCALATION: Yes, but opt-in for employees
EMPLOYER CONTRIBUTION: 200% on 4%, plus profit sharing contribution—normally 10%
“At Kimley-Horn, we hire great employees, we serve great clients, and we work hard and run a successful business,” says Tammy Flanagan, chief financial officer (CFO) of this planning and design engineering consulting firm, headquartered in Raleigh, North Carolina. “These strengths put us in a position to reward our employees with what we believe are the best benefits in our industry; our retirement plan is the most important piece of our benefits package.”
All benefits-eligible employees are automatically enrolled in the retirement plan at a 4% contribution level, which makes them eligible for a 200% match. The company also makes a profit-sharing contribution, which has historically been 10%. Treasurer and Vice President David McEntee points with pride to the roughly 98% participation rate. “Of that 98%, 99% contribute at least the 4% necessary to receive the maximum match of 8% and, therefore, the maximum possible company contribution of 18% of eligible compensation,” he says, noting that includes salary and bonuses. “Our retirement plan is an integral part of our culture, and it plays a critical role in our ability to attract and retain good employees,” he says.
A fast-growing company, with more than 80 offices nationwide, Kimley-Horn hires approximately 250 recent college graduates per year. Over 40% of its employees, in fact, are age 30 or younger, while, at the same time, Flanagan says, the company celebrates its long-tenured employees, some with the company over 40 years.
All the young workers qualify to receive the plan’s maximum benefit. And Millennials comprise about two-thirds of the 25% of participants in a Roth plan. Since January 2016, the firm has had discussions regarding changing the default investment from pre-tax to Roth, as Roth savings can potentially benefit young workers who have decades of tax-free growth ahead of them and pay relatively lower taxes. Millennials also comprise 30% of the retirement plan committee. “We are intentional about that,” McEntee says. “We want to be sure we have a cross representation of roles, responsibilities, ages, and locations across the firm.”
Kimley-Horn makes financial advisers available to all of its employees. CAPTRUST advisers travel to its offices across the country to meet with employees in person, and they are also available for telephone consultations. The retirement committee meets quarterly with CAPTRUST to review fees, as well as the performance of investments.
The company switched from the T. Rowe Price Retirement Date Funds to the T. Rowe Price Retirement Date Trusts on January 1. “About 80% of participants and 60% of plan assets are in these investments, and participants will see an expense ratio reduction that will save over $400,000 annually,” Flanagan says.
At the same time, Kimley-Horn added another level of transparency by clearly disclosing administrative fees on participants’ statements ($22 per quarter). To help keep expenses low for newer employees, Kimley-Horn pays their fees for their first two years with the company. —Judy Faust Hartnett
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