Articles

New Design Options Yield Big Results

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.

Situation

The client had two primary goals:
  • Increase overall plan participation
  • Add options that would increase savings into the plan

Solution

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

Outcome

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.

Fast Facts

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

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Newport Group, Inc. and its affiliates provide recordkeeping, plan administration, trust and custody, consulting, fiduciary consulting, insurance and brokerage services. Fiduciary consulting services are provided through Newport Group Securities, Inc., an SEC-registered investment adviser and FINRA-registered broker-dealer, and InterServ, LLC, an SEC-registered investment adviser. Newport Group Securities, Inc. and InterServ, LLC are affiliates of Newport Group, Inc. All securities transactions are provided through Newport Group Securities, Inc., in its role as broker-dealer. All fiduciary consulting services are provided through the registered investment adviser. when offering variable insurance products, Newport Group Securities, Inc. acts solely in its capacity as a broker-dealer.
Trust and custody services provided by Newport Trust Company, a New Hampshire state chartered trust company and wholly owned subsidiary of Newport Group, Inc.