Morgan Creek Capital Management, LLC

Morgan Creek Capital Management’s 401(k) is a small plan, with only 30 active participants. Included in that population are the firm’s professional investors, whose work focuses on alternative investments such as emerging technologies and digital assets.

But some of the participants are not professional investors, and, for Nick Taylor, the firm’s chief financial officer, chief operating officer and a member of the plan committee, this is the reason why the plan’s default investment is “a solid target-date option. We offer a broadly diversified series of funds and sectors, and a reasonable balance of options.”

Despite what appears in some client portfolios, Morgan Creek, whose offices are in Chapel Hill, North Carolina, has no digital assets or other alternatives—including investments the firm is affiliated with—in its plan.

“We do occasionally get requests, … but we’ve taken the view that we are not comfortable with that,” says Taylor. “We are bullish on tech, including digital assets, but, from a plan perspective, we aren’t at the tip of that spear. We know we have people who have digital assets personally, but not in the plan.”

The firm does offer a brokerage window that some Morgan Creek traders like to use to optimize tax efficiency across their retirement and other investment accounts, Taylor says.

He further notes that the plan has about $11.6 million in assets and a total of 50 participants with an account balance; among them are the 30 active employees, who average a 20% contribution rate. Overall, 91% of employees participate, and the average contribution rate is 14%. Part-time employees are eligible to contribute.

The company makes a 3% safe harbor contribution annually to all employees, which is fully vested at the time it is made.

Taylor describes the plan’s investment offerings as “broad but fairly vanilla.” However, “We are constantly looking at things we can do to enhance the plan.”

Just prior to the pandemic, the firm added in-plan Roth conversions, which have been popular, as was the Roth contribution feature, adopted approximately seven years ago. As a result of both, approximately one-third of all participant contributions are made as Roth contributions, in another nod to the tax efficiency Taylor mentioned.

Morgan Creek also recently added a qualified birth and adoption withdrawal option, in an effort to make the plan as “flexible and user-friendly as we can,” Taylor says.

And the firm has increased the educational offerings for participants via annual customized webinars from T. Rowe Price. These provide general information on the plan, its web tools and investment specifics.

As the participant population of the 20-year-old company ages, it is adding features that appeal to people nearing retirement. A notable one has been to modify plan documents to allow for partial redemptions as a drawdown strategy for retirees. Creating retirement income has also become “more of a theme” of the webinars, says Taylor.

However, in an effort to avoid plan leakage, Taylor says, the firm has not yet added emergency savings or student-loan repayment components.

“We would more prefer that the plan be focused on all things retirement,” he says. “We want to have flexibility, but we want to discourage [money leaving the plan] due to too much flexibility.”

—Amy Resnick