Midwest Radiology, P.A.

Midwest Radiology, P.A., in Roseville, Minnesota, has a massive 98% participation rate and a 15.3% average deferral rate. Providing services 24/7 through a network of imaging centers, urgent care centers and hospitals in the Twin City and Western Wisconsin areas, the company is also invested in its 401(k) plan, offering a 3% match and 7% profit sharing. The match is immediately vested, and profit sharing is vested at 20% per year of service.

“That entices a lot of people at the get-go,” says Barry Lindo, senior director of human resources. “There’s also a robust fund lineup with low costs, and we pay the administrative fee outside of the plan.” All but one of the fund offerings in the core lineup have an expense ratio below the category average, and using corporate dollars for the administrative fee provides participants with an increased return of 6 basis points, he says.

“The richness of the plan is unique,” says Christopher Prevette, investment adviser, Blackbridge Financial, who has worked with the plan since 2006. “What makes the plan so effective for them is the generosity and the attention they give to details. They have a very thoughtful committee.”

Most of the company’s employees are radiologists, but it also has administrative staff. “This includes people who answer the phone and are doing customer services for $20 per hour, up to people earning $1 million per year. The physicians on the committee have been cognizant of that, and paying those fees from outside of the plan is a big deal when you’re making only $20 per hour,” Prevette says.

The value of the plan is ingrained in employees, and Midwest has also added administrative features to get people more involved. These start with 4% automatic enrollment, adding 1% per year up to 10%. The sponsor is considering raising the automatic escalation to 15%. The Roth component has been particularly popular—75% of the doctors use the Roth 401(k).

“It’s such a robust plan, Principal has to figure out what we can do, communication-wise, to benefit these folks who already know so much and are involved with the plan,” says Maribeth Mark, senior relationship manager with Principal Financial.

Midwest also offers a variety of investing options for all income and experience levels—with target-date funds, index funds, managed accounts and a brokerage widow. The Edelman Financial Engines advice component is also popular. “Edelman has tools on the website [participants] can utilize for free, and if they want to use a financial planner, they can use it from a fee of 90 basis points down to 35 basis points,” Lindo says.

“Its philosophy is fee-conscious and risk-adjusted returns—not a matter of just chasing the lowest fee option, but the best performance and fees relative to risk,” says Prevette. “It’s been considerate of everybody involved.”

—Kimberly Lankford