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Plan Summary Report: ABC Company 401(k) Plan PowerPoint Presentation
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Plan Summary Report: ABC Company 401(k) Plan
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  1. Plan Summary Report: ABC Company 401(k) Plan As of January, 2011 Presented by: John Smith, Vice President First National Bank In partnership with BPA-Harbridge

  2. Table of Contents • Economic and market outlook • Snapshot of our current plan • Comparing our plan with national and BPA-Harbridge averages • Management and demographic reports • A review of fund performance • Initiatives and priorities for the coming Year

  3. Economic and Market OutlookMost recent economic outlook from Morningstar

  4. Snapshot of our Current Plan

  5. Current funds and balancesMutual fund holdings as of January 5, 2011

  6. Investment among asset classes * Source: 50th Annual Survey of Profit Sharing / 401(k) Council

  7. Snapshot of current plan • Total assets: $7,553,535.66 • Approximately 79% in equities, 21% in fixed income / money market holdings (national average is approximately 70% / 30%) • Number of participants with a balance: 275 • Total number of employees: 337 • Participation rate: 65% • Industry average: 79% for plans with a match, 65% for plans without a match • BPAH average: 64% across all plans • Number of funds offered: 14 • Industry average:18 funds per plan* • BPAH average: 12.5 funds per plan • Average number of funds used per participant: 3.4 • Average across BPAH platform: 4.4 * Source: 50th Annual Survey of Profit Sharing / 401(k) Council

  8. Examining participation • Our employee deferrals average 5.2% of pay (4.8% for NHCEs, 6.7% for HCEs) • Industry average: 5.4% for NHCEs, 6.9% for HCEs • Our employer contributions average 3.2% of pay (including match and year-end discretionary profit sharing) • Industry average: 4.5% of pay, including all ER contributions • The total contribution being made from all ER and EE sources averages 8.4% of pay for our typical employee, or $5,424 / year • Our average plan balance: $39,887 • Industry average: $45,634 • Average across BPAH platform: $23,581 for all plans, or $28,277 in continental U.S. plans (excluding PR clients) • The average annual compensation across our organization is $44,321 (prior year average annual comp) • Our average employee has accumulated .9 times annual salary in this plan • Our average employee age is 41 * Source: 50th Annual Survey of Profit Sharing / 401(k) Council

  9. Putting loans into perspective • Total loan balance for plan: $390,884 • 2.1% of total plan assets, compared with 1.4% national average, and 1.2% BPAH average • Number of employees with a loan: 39 • 14% of participants, compared with 23.7% industry average for plans that offer loans • Average loan amount: $3,490 • National average loan amount outstanding: $8,595 • Average loan outstanding across BPAH platform: $8,151 under Reserve Plus™ program, $5,118 under traditional loan program * Source: 50th Annual Survey of Profit Sharing / 401(k) Council

  10. Snapshot of current plan • Cash flow for Q3, 2010 • Contributions of $400,000, including • $310,000 employee deferrals • $70,000 matching contributions • $20,000 loan repayments • Distributions of $150,000 • Net cash flow (excluding investment returns) is approximately $250,000 / quarter, or $1 million / year

  11. Industry statistics • Average match is 50% on the first 6% of employee deferrals. • Across industry, average match is 64 cents on the dollar for the first 5.2% deferred by employees (3.3% of pay in matching dollars) • Approximately 9% of plans use a safe harbor formula (8% match, 1% core contribution) • Nationally, 18.4% of Plans now offer a Roth contribution feature • In these plans, 11.6% of employees are making Roth contributions • Over 98% of plans now include a catch up feature. Nationally, 25.6% of eligible employees (those over age 50) make a catch up contribution • Automatic enrollment is offered by 23% of employers (19% among plans with under 5,000 participants) • 92.3% of DC plans are valued daily (internet access) * Source: 50th Annual Survey of Profit Sharing / 401(k) Council

  12. Industry statistics, continued • Avg. Age 42 • Avg. years in plan 7.9 • Avg. planned retirement age 66 • Percent employed full time 93% • Avg. Balance $45,634 • Median Balance $15,474 • Allocation of new contributions: Equity 71% Fixed 29% • Existing balances: Equity 64% Fixed 36% * Source: 50th Annual Survey of Profit Sharing / 401(k) Council

  13. ADP Testing (for non-safe harbor plans) Of all plans in survey: • 62.1% passed ADP test without adjustments or refunds • 10.8% passed by limiting HCE contributions when max reached • 7.7% passed by limiting HCE deferrals by plan design • 24.6% passed by paying refunds to HCEs • 1.1% deposited excess amounts into a non-qualified arrangement • 3.8% satisfied through some other approach * Source: 50th Annual Survey of Profit Sharing / 401(k) Council

  14. Action Items to Note The following reports appear next: • List of employees who are not contributing to the plan • List of those who have never accessed the web or VRU system • A list of those whose balance is at least 90% invested in the default fund

  15. Management and Demographic ReportsIncludes:Account balance by sourceAccount balance detailsAverage balances by age groupFund utilizationAsset allocation by age groupGenerated as of January 5, 2011

  16. A Review of Fund Performance

  17. Observations and Commentary

  18. Observations and Commentary • Participation has increased by more than 10% since plan was initially rolled out • Campaign still needed to increase participation and deferral rates among younger workers • Suggest targeted mailing for those who have never accessed web / VRU. • Suggest second sweep of meetings to show employees how to log on and use website • Suggest adding targeted maturity or lifecycle funds to help less sophisticated investors • Suggest a change to loan policy (1 loan for any reason, no adjudication). Consider Reserve Plus. • Discussion of ADP / ACP test • Possibility of automatic enrollment • Safe harbor may be too expensive

  19. Observations and Commentary • Fund review process will highlight our recommendations for fund additions / changes • Suggest changing default fund to balance fund (consistent with PPA regulations) • HR is doing a good job of administering the plan; you are very proactive