PLANADVISER - July/August 2018 - 48
servicing strategies
Stretching the Match
A
An adjustment to the formula can enlarge participants' savings
bout six years ago, a group from
Hendrick Motorsports in Charlotte,
North Carolina, including
the president, chief financial officer
(CFO), human resources
(HR)
staff
and the retirement plan's adviser, met
to brainstorm ways to get participants
to contribute more to the company
401(k).
At the time, Hendrick was matching
50% up to 5% of salary deferred, and
the average deferral rate was 5.87%.
According to Heather Masterson, the
firm's HR director, someone proposed
matching more than 5% of salary deferrals.
" The
group wanted to increase
employee deferrals but wasn't sure
it wanted to go up to the 10% recommended
by industry professionals, " she
recalls. " It felt 9% was a good target to
get participants to defer, so the decision
was made to match 33% of up to
9% of deferrals. "
Hendrick had to amend its plan
document because the old formula
was spelled out there. A change in
the recordkeeping system and one in
payroll were also made.
For the company's efforts, the new
match appears to have worked: As
of March 31, the average participant
deferral into the 401(k) was 9.47%.
The stretch match is not yet a
widely utilized plan feature. According
to the 2017 PLANSPONSOR Defined
Contribution (DC) Survey,
less than
one-third (30.3%) of defined contribution
plan sponsors use one. However,
as Hendrick's story shows, they can
be a very effective means to get retirement
plan participants to save more.
David Blanchett, head of retirement
research at Morningstar Investment
Management LLC in Lexington,
Kentucky, says the company match is
a powerful incentive to save for retirement.
" It's the anchor for a lot of people
in deciding how much to save, " he says.
" That's why advisers would [want to]
suggest the feature to plan sponsors,
48 | planadviser.com july-august 2018
Art by Dadu Shin
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PLANADVISER - July/August 2018
Table of Contents for the Digital Edition of PLANADVISER - July/August 2018
Speaking Their Language
Stretching the Match
Giving Them a Break
Managed Accounts' Value
Principal Transactions
Statute of Limitations
Prohibited Transaction Relief
PLANADVISER - July/August 2018 - C1
PLANADVISER - July/August 2018 - FC1
PLANADVISER - July/August 2018 - FC2
PLANADVISER - July/August 2018 - C2
PLANADVISER - July/August 2018 - 1
PLANADVISER - July/August 2018 - 2
PLANADVISER - July/August 2018 - 3
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PLANADVISER - July/August 2018 - 41
PLANADVISER - July/August 2018 - 42
PLANADVISER - July/August 2018 - 43
PLANADVISER - July/August 2018 - Speaking Their Language
PLANADVISER - July/August 2018 - 45
PLANADVISER - July/August 2018 - 46
PLANADVISER - July/August 2018 - 47
PLANADVISER - July/August 2018 - Stretching the Match
PLANADVISER - July/August 2018 - 49
PLANADVISER - July/August 2018 - Giving Them a Break
PLANADVISER - July/August 2018 - 51
PLANADVISER - July/August 2018 - Managed Accounts' Value
PLANADVISER - July/August 2018 - 53
PLANADVISER - July/August 2018 - Principal Transactions
PLANADVISER - July/August 2018 - Statute of Limitations
PLANADVISER - July/August 2018 - Prohibited Transaction Relief
PLANADVISER - July/August 2018 - C3
PLANADVISER - July/August 2018 - C4
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