How do you shop for a retirement (defined contribution) plan?

If you are a small nonprofit organization or even an association and don’t have a full-time Human Resource specialist on staff, how do you figure out the nuts and bolts of shopping for a retirement plan that serves the needs of your organization or membership?

  • First, the organization needs to know how many employees will likely participate in this plan.
  • Second, the organization should decide if they are going to offer matching contributions (New Orleans nonprofits that offer matching range from 0-8% in matching benefits).
  • Third, it needs to be decided when an employee can enroll in such a plan and when they qualify for vesting.

Once those questions are answered, an organization can begin “shopping” for retirement plan options.  There are several different kinds of plans that an organization may offer (here are some examples).

Ultimately, the organization should form some sort of voluntary committee, comprised  of either a staff members, a board member, a senior leader and perhaps outside volunteers with expertise in accounting, HR, and/or legal fields. This committee can formulate the necessary questions and prescribe values to different aspects of a retirement plan, so that plans can be compared and weighted.

For larger organizations and certainly for associations with multiple members, they may want to consider releasing a public Request for Proposals, so that they can send it along to retirement plan providers and Third Party Administrators, to see who has the best plan to meet the articulated needs of the group.  Here is a Sample RFP for Associations seeking retirement benefitsthat can be adjusted to fit an association.

Understanding your market size

To define groups and pool resources under an association or equivalent membership organization, it’s helpful to know the market size.  How many organizations of similar focus are within your region or city? How many employees do each of those organizations employ? What percentage of these potential organizations and employees may participate in a Multiple Employer Plan?  These questions and more can be answered through market research, self-reported surveys and focus groups.  Some examples include a self-reported survey designed for the Partnership for Youth Development, another is the Louisiana Association of Public Charter Schools survey.