As previously communicated in a recent video, we are making a change to the 401(k) component of the OneBeacon 401(k) Savings and Employee Stock Ownership Plan (the “Plan”).
Effective in the first pay period in July, we are suspending the bi-weekly 401(k) match within the program, and implementing a bi-weekly 3% contribution instead. This has essentially no impact on most employees, since most employees currently contribute at least 6% of salary to the 401(k) Plan, and therefore receive a 3% company matching contribution already.
This change is being made as a result of the termination of the Pension Plan, which Mike Miller mentioned on his recent quarterly call. There were excess Company Pension Plan assets following termination of the Plan. Given the tax qualified status of the Pension Plan, there are specific IRS rules about how those surplus assets can be used in order to avoid an additional excise tax. To comply with the rules, OneBeacon will be using these assets to fund the 3% contribution in what is being called a Qualified Replacement Plan (“QRP”) within the existing OneBeacon 401(k) Savings and Employee Stock Ownership Plan. You will see this contribution referenced in your account at Vanguard as “Bi-Weekly QRP Contribution” and on your paystub as “QRP Contrib”. We will also use these excess assets to fund the annual ESOP contributions.
No action is needed by employees; this change will occur with the July 7, 2016 paycheck.
Investment of these contributions will follow the investment elections that you have on file for your own Plan contributions. If you do not have an investment election on file, these contributions will be invested in the age-appropriate Target Retirement Trust fund, which is the default fund for our Plan.
If you would like to change where your contributions are invested, contact Vanguard at vanguard.com/retirementplans or 800.523.1188.
As always, if you have any questions, please reach out to us at firstname.lastname@example.org.