Feb 15, 2017
When an architectural/engineering firm wanted to increase plan participation and offer additional options to increase retirement savings, Newport Group and its advisor partner diagnosed a contemporary solution that delivered effective results.
The client had two primary goals:
- Increase overall plan participation
- Add options that would increase savings into the plan
Newport Group and its advisor partner began by providing the client with a customized analysis of its current plan, including an automatic contribution arrangement (ACA) to drive participation, as well as a traditional after-tax contribution option for employees wanting to save up to the IRS limit of $53,000.
Newport Group then helped amend the plan document by:
- Creating the ACA option for all new hires and existing employees under the default rate of 3 percent
- Adding after-tax contributions
With the enhanced plan design options, the plan’s participation rate increased from 73 percent to 86 percent. In addition, six employees immediately elected to contribute after tax, averaging $8,400 each.
Client: Architectural and Engineering Firm
- Plan Type: 401(k)
- Plan Assets: $56 million
- Plan Participants: 584
- Client since 2010
How We Helped the Client
- Increased plan participation by 13 percent.
- Helped increase savings by providing an after-tax option
- How We Helped Our Advisor Partner
- Reviewed current plan design
- Discussed most recent ADP/ACP testing
- Completed projected ADP/ACP test to verify feasibility of adding after-tax contributions