Less than a year after opening their doors, Ping Hai DDS & Associates established their first 401(k) plan. When asked why, Chief Financial Officer Gan Mo stressed, “For retirement and
recruiting. It’s a great way for a dentist to put away money for retirement and enjoy potential tax savings at the same time. It’s also an important consideration for new employees when they’re making the decision to join our team.”
A Thriving Practice
Located in Marietta, Georgia, just outside of Atlanta, the growing practice is currently in its fourth year of business. Though there are many dental offices in the Atlanta area, there are enough potential clients living there for every practice to get its share. “Everyone can get their piece of the pie,” said Mo. There are four full-time employees in the office, including Dr. Hai. Mo, Dr. Hai’s husband, manages the practice’s finances as its part-time CFO. The other employees could be described as young and mobile, mostly in their thirties. Because the practice has experienced some turnover, Dr. Hai is seeking ways to stabilize her workforce by hiring and retaining the right talent. One important part of her strategy is offering a 401(k) with an employer match.
The Search for a New 401(k) Provider
Although Mo was happy with the service from their former 401(k) provider, he was not satisfied with the range of investment choices. He also thought the management fees were high. As he searched for a new plan provider, Fidelity came to mind because he had personal accounts with the company. “Fidelity is a company I already trusted,” he said, “and I thought having all of our accounts in one place would make it much easier to manage our entire financial picture.” He also felt that Fidelity did a good job trying to keep costs competitive for its customers.
Trade Show Brings Good News
Unsure if Fidelity would be able to administer a 401(k) plan with so few employees, Mo made a happy discovery in March of 2008 at the Hinman Dental Meeting, a trade show in Atlanta. He learned of the discounted 401(k) plan offered by Fidelity especially for Henry Schein dental customers and spoke with a Fidelity Representative about moving Ping Hai DDS & Associates’ existing 401(k) to Fidelity.
To help Mo’s decision-making process, Fidelity conducted a plan exam so he could compare the practice’s existing plan with what Fidelity could offer. The review compared his plan against those of companies similar to his, and compared his current estimated fees with proposed Fidelity plan options.2 It concluded with a list of easy-to-understand action items for him to consider.
A Smooth Transition
With his decision made, Mo began the transition process. He reports that the move to Fidelity was easy to navigate. To their credit, the practice’s former plan provider helped by supplying the information necessary for the transition. Mo was then able to send the data to Fidelity electronically. Diane, his contact at Fidelity, communicated with him via e-mail and follow-up phone calls. “She answered my questions and could always direct me to the right people,” he said.
Mo reports that the entire process did not take much of his time. “A couple of days, total,” he said. He made the decision to move the plan in mid-March and it was up and running at Fidelity by the end of May. “There were no glitches,” he reported. “We didn’t miss a beat.”
Important Plan Decisions
To complete the move to Fidelity, Mo had to make some critical choices, including what to use as the plan’s default investment option. He chose the Fidelity Freedom Funds®,which are target retirement date portfolios. If employees do not select an investment mix, their assets are invested in a Freedom Fund based on their date of birth and the year they might retire (assuming a target retirement age of 65). The fund then adjusts to become more conservative as the target retirement year approaches. Performance of the Fidelity Freedom Funds depends on that of their underlying Fidelity funds. These funds are subject to the volatility of the financial markets in the United States and abroad, and may be subject to the additional risk associated with investing in high-yield, small-cap, and foreign securities.
The plan also offers an employer match of up to 4%, an incentive that’s motivated employees to participate. They understand that not taking advantage of the match “is like leaving money on the table,” said Mo. Another decision was not to allow loans from the plan, since he feels it’s important
for employees to keep their savings working toward retirement. He also wants employees to avoid being subject to taxes and penalties if they leave their job and don’t have the money to pay back the loan.
Bringing Employees the Information They Need
The practice’s employees were already familiar with Fidelity by reputation, and comfortable with the change in 401(k) provider. They just needed the specifics of their new plan. Fidelity supplied employee communication materials, including brochures for Mo to distribute, and e-mails he said were easy to personalize and send out to employees. Employees found that they can easily learn about their plan and their investment choices in a way that’s convenient for them. They can access information through online resources, a toll-free number, or a local Fidelity Investor Center, where they can meet face-to-face with a representative. All of these options give them access to information and planning tools to help them make well-informed decisions about their retirement savings.
A Valuable Benefit
Current employees see the value of participating in the 401(k) plan, especially when they realize the potential for matching contributions. When they consider how much the matching contribution can add to their overall compensation, they are impressed. Now, as the practice seeks to hire and retain new talent, it can use the 401(k) plan as a compelling selling point for prospective employees.
Mo continues to be happy with his decision to move the organization’s 401(k) plan to Fidelity. “My impression is that Fidelity remains focused on controlling costs for its customers,” he said. He’s also finding Fidelity easy to work with. “The transition period was professional and efficient, and I’m having no problems with the ongoing process of running the plan. I think it’s a great option for a dental practice like ours.”
Before investing in any mutual fund, please carefully consider the investment objectives, risks, charges and expenses. For this and other information, call or write Fidelity for a complimentary prospectus. Read it carefully before you invest.
Your Henry Schein Dental Sales Consultant can put you in touch with a representative from Fidelity Investments, or you can contact Fidelity directly at 866-467-0633. Whether you’re thinking of setting up a new 401(k) plan for your practice or moving an existing plan, Fidelity can help you determine if its discounted 401(k) plan for Henry Schein dental customers makes sense for you. Investor Center services are provided beyond your employer sponsored retirement account.
For plan sponsor use only.
There are many kinds of workplace retirement plans. When determining which plan may be appropriate for your practice, you should consider all relevant factors including, but not limited to, contribution types and limits, ease of administration, investment options, initial costs and ongoing costs. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.
The experience of this investor may not be representative of the experiences of all investors and is not indicative of future performance or success.
©2008 FMR LLC. All rights reserved 1. Available only to U.S. dental practitioners. 2. Data for plan comparison provided by Morningstar and Building Futures VIII. Building Futures is based on data for all 12,770 corporate defined contribution plans recordkept by Fidelity Investments with a balance as of year-end 2006, and their corresponding 10.1 million participants. 3. Please note that any PlanExam conducted will not reflect the discounted 401(k) plan offered to Henry Schein dental customers in the first year. The discounted 401(k) plan for Henry Schein dental customers is only available to U.S. dental practitioners. Neither Henry Schein, Inc. nor any of its affiliates are a registered brokerdealer under the federal securities laws. The Fidelity retirement plan products offered under this discount program are offered by Fidelity Brokerage Services LLC, Member NYSE, SIPC, 100 Summer Street, Boston, MA 02110. 500581.1.0