New Leaf Solutions

Service based company in Sacramento with staff and clients throughout California

Goal: 

Improve retirement plan offering to improve recruiting efforts and increase contributions owners could make to the retirement plan.

Situation before our help: 

Company had an existing SEP IRA retirement plan:

• 5% Employer contribution
• No employee education and guidance offered on the retirement benefit
• Majority of staff saving insufficient sums for retirement
• Qualified Default Investment Alternative (QDIA) was money market mutual fund with a large percentage of the staff 20+ years from retirement
• No Roth retirement savings  opportunity offered
• No vesting schedule on employer contributions 

Updates implemented:

• Established new 401(k) Plan
• Assisted all staff in consolidating retirement accounts 
• New 401(k) retirement plan design included:
  • Roth retirement savings option
  • Safe harbor plan design to allow owners to max fund personal 401(k) retirement savings accounts and pass IRS testing requirements
  • Automatic enrollment at 6% employee deferral and automatic escalation at 1%/year to a maximum payroll deferral of 10%
  • Short eligibility period to assist with staff recruiting efforts
  • Flexible employer contribution provisions allowing the employer to replicate the previous SEP IRA contributions however with a 5 year vesting schedule to encourage long-term employee retention 
• Launched virtual educational campaigns and personalized staff consultations to promote understanding of retirement benefits 

Outcomes:

• Increased  tax savings for owners
• Improved retirement savings rates company wide
• Improved staff financial well-being  and financial confidence
• Improved awareness of employee total compensation
• Improved awareness and understanding of employer retirement savings contributions
• Improved Qualified Default Investment Alternative which better aligns with the employee demographic
• In recruiting efforts:
  • Better recognition of  the 401(k) retirement benefit offering compared to previous SEP IRA
  • Top tier retirement offering in terms of eligibility requirements and employer contributions
• In retention efforts:
  • Reduced  levels of turnover due to compensation