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PLAN SPONSOR OF THE YEAR Finalists

Corporate 401(k) >$10MM - $50MM

Rotating Equipment Repair

Jan Ellis

TOTAL PLAN ASSETS/PARTICIPANTS: $13,486,300/110

PARTICIPATION RATE: 78%

AVERAGE DEFERRAL RATE: 9.6%

DEFAULT DEFERRAL RATE: 6%

EMPLOYER CONTRIBUTION: Discretionary Contribution of 10%

At Rotating Equipment Repair Inc. (RER), in Sussex, Wisconsin, providing a secure retirement for employees may be the company’s No. 1 goal. For instance, RER adds a discretionary company contribution equal to 10% of employee compensation and in addition, the plan sponsor protects the participants’ retirement savings by not allowing in-service distributions of RER contributions until participants reach 65 years old; further, it refuses to permit loans from these contributions.

“The company has been, historically, very generous with its employees,” says Cliff Dunteman, adviser of Francis Investment Counsel LLC (FIC), who works with RER.

Started in 1982, RER is relatively new to plan design features that currently dominate the retirement industry. Just earlier this year, the plan sponsor implemented automatic enrollment and an in-plan ROTH conversion feature. Automatic escalation will be implemented next January.

“Many employees just don’t get around to enrolling, so we decided to initiate auto-enrollment and to improve participant success further, we decided on auto-escalation,” says Jan Ellis, chief financial officer, retirement plan investment committee member and administrative committee member at RER.

At the default deferral rate of 6%, participants will have their deferrals increased by 1% each year, up to a maximum of 10%.

Since late 2015, RER has utilized recordkeeper OneAmerica, crediting them for exemplary service in determining employee eligibility, recordkeeping timeliness and notices for auto-escalation and auto-enrollment. In April 2014, the company hired Francis Investment Counsel as the new investment adviser firm, formed an investment committee, and created an investment policy statement (IPS). Seven months later, the company introduced a revised fund menu, including target-date funds (TDFs), lifestyle funds, based on risk tolerance, and overall greater diversification. They implemented separate annual employee group meetings and added annual, obligatory, one-on-one educational meetings with an FIC adviser, Patricia Dirksmeyer, during company time to discuss retirement readiness and financial wellness. 

Since enforcing the feature, RER has seen a drive in engagement with their employees in retirement planning and a large jump in deferral increases—with a current average rate at 9.6%.

“Most participants utilize her for more retirement planning, but there are others who are using Dirksmeyer  for general life financial wellness,” says Ellis. “Almost always—right after her visits—we see a big jump in the number of people increasing their deferrals, but now we’re starting to see it even before she comes.”

Dirksmeyer believes it is the connection between the program and participant that creates better financial well-being and planning among employees.

“Establishing a relationship is the key to the success of the advice program, because it builds a relationship with the participants, and they’re comfortable then coming back the next year and asking questions,” she says. 

With a low turnover rate; 78% participation; 40% of employees deferring Roth; advancing financial planning services; and more, it is a clear indicator RER has kept its goals in mind. —Amanda Umpierrez

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