March 23, 2020

Could RSP Be Right for Your Company?

Western Growers members take pride in producing the freshest, highest quality produce in the world. Our members also take pride in how their food is grown and harvested, and go to great lengths to ensure the safety and well-being of their employees, who are almost universally considered an extension of the families who put their names on the boxes.

With labor being among the most important inputs on a farm, our members demonstrate their commitment to their workforce in numerous, real ways.

For example, in addition to providing a safe working environment, competitive wages and health benefits, 77 percent of participants in the latest Western Growers HR Practices Survey indicated they offer a 401(k) plan, with 93 percent matching their employees’ contributions.

However, as with many other types of employee benefits, offering a 401(k) plan in the fresh produce industry presents unique challenges, including the need to serve a bilingual, seasonal workforce. Which is precisely why Western Growers Financial Services (WGFS) established the Retirement Security Plan (RSP) to provide a low-cost savings and investing plan tailored to the specific needs of agricultural employees, while putting more control of the program into the hands of the agricultural employer.

The RSP is structured as a qualified group trust, which means it is limited to participating employers. While each participating employer has complete jurisdiction over its own 401(k) plan, all participating employers have access to the proven expertise of WGFS, a registered investment advisor, and are invited to attend quarterly investment advisory committee meetings, where fund managers—including Richard Alpert of Raub Brock and Quoc Tran of Lateef, both staples at Western Growers events—and other investment professionals are routinely on hand to share market insights.

“The quality of speakers and depth of knowledge presented at the RSP investment committee meetings are an invaluable resource in our effort to provide our employees with fiscally sound investment options and to help further their long-term financial security,” noted Mitch Ardantz, managing partner at Bonipak Produce.

At the direction of the participating employer, each individual company’s 401(k) plan can include up to 19 different funds spanning the spectrum of risk tolerance. Fund choices range from money market funds to mutual funds to index funds to actively managed funds (including two managed by Alpert and Tran, and two managed by WGFS). The mix of fund offerings is reviewed and approved by the collective decision of the participating employers at the quarterly investment advisory committee meetings.

Once in place, the 401(k) is participant directed, which means the employees choose their own investments. Employees elect a percentage or dollar amount of their paycheck to be contributed into the 401(k) plan, which can be distributed into either a traditional 401(k), which defers taxes until retirement and lowers current tax liability, or a Roth 401(k), which uses after tax dollars and lowers future tax liability.

Fortunately, employees are not on their own in choosing their investment elections. WGFS staff will visit each participating employer to assist in the enrollment process, thoroughly explaining the various fund options to the employees, while also educating them on basic investment literacy and factors to consider when making their investment choices.

Additionally, all employees have online access to their account via a user-friendly website with intuitive retirement planning tools, where they can manage their investments, research investment options and even request a withdrawal. For those who prefer a human voice, employees will also have access to live representatives to address any questions they may have about their retirement accounts.

Perhaps most significantly, participating employees can access the RSP at costs far less than what is typically paid to traditional financial institutions. Most investment companies—like Fidelity—sell 401(k) products to make money, and can take as much as 1 percent off the top in sales charges. On the other hand, WGFS was created by Western Growers for its members and does not have a similar profit-only motive, taking no sales charges.

Each fund in the 401(k) plan does have a fee associated with it, which is calculated in what is known as an expense ratio. WGFS is able to leverage the collective buying power of RSP to keep these expense ratios low, which can range from 0.09% to 1.30% (with an average of 0.63%).

“After researching our options, we recognized that we would be saving our employees at least 85 basis points [.85%] per year in the cost of their retirement plans by going with Western Growers’ Retirement Security Plan,” stated J.P. LaBrucherie, president of LaBrucherie Produce. “This level of savings will add up exponentially in our employees’ retirement accounts.”

Ultimately, the idea of the RSP is to put more money back in the pockets of the employees, while empowering them to take control of their own retirement with a range of options to meet the specific needs of each participant. To learn more about how RSP might be the right fit for your company, please contact Matt Lewis at [email protected] or 949-885-2379.