Note 11 - Employee Benefit Plans

12 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Compensation and Employee Benefit Plans [Text Block]

(11) Employee Benefit Plans

Supplemental retirement benefit plan. We have SRBAs with certain of our key employees (each, a “Participant”). Under the SRBAs, if the Participant remains in continuous service with us for a period of at least 30 years, we will pay the Participant a supplemental retirement benefit for the 15-year period following the Participant’s retirement equal to 50% of the Participant’s highest average annual base salary for five consecutive years in the 10-year period preceding the Participant’s retirement. If the Participant retires prior to the later of age 65 or the completion of 30 years of continuous service with us, but has completed at least 10 years of continuous service, the amount of the Participant’s supplemental retirement benefit will be reduced by 1/360th for each month short of 30 years that the Participant was employed by us.

The reconciliation of the projected benefit obligation, plan assets, funded status and amounts recognized for the SRBAs in our consolidated balance sheets is as follows:

	Year Ended
	September 30,			October 1,			October 2,
(In thousands)	2023			2022			2021
Change in benefit obligation:
Benefit obligation at beginning of year	$	11,779		$	12,888		$	11,610
Service cost		333			399			312
Interest cost		518			347			316
Actuarial (gain) loss		(900	)		(1,650	)		855
Distributions		(198	)		(205	)		(205	)
Benefit obligation at end of year	$	11,532		$	11,779		$	12,888
Change in plan assets:
Actual employer contributions	$	198		$	205		$	205
Actual distributions		(198	)		(205	)		(205	)
Plan assets at fair value at end of year	$	-		$	-		$	-
Reconciliation of funded status to net amount recognized:
Funded status	$	(11,532	)	$	(11,779	)	$	(12,888	)
Net amount recognized	$	(11,532	)	$	(11,779	)	$	(12,888	)
Amounts recognized in accumulated other comprehensive loss:
Unrecognized net loss	$	373		$	1,285		$	3,213
Net amount recognized	$	373		$	1,285		$	3,213
Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss):
Net (gain) loss	$	(900	)	$	(1,650	)	$	855
Amortization of net loss		(13	)		(278	)		(215	)
Total recognized in other comprehensive (loss) income	$	(913	)	$	(1,928	)	$	640

In 2023, 2022 and 2021, the actuarial (gain) loss includes amounts resulting from changes in actuarial assumptions utilized to calculate our benefit plan obligation such as the discount rate, estimated future compensation levels and changes in plan participants.

The accumulated benefit obligation was $10.6 million and $10.7 million as of September 30, 2023 and October 1, 2022, respectively.

Net periodic pension cost for the SRBAs includes the following components:

	Year Ended
	September 30,		October 1,		October 2,
(In thousands)	2023		2022		2021
Service cost	$	333	$	399	$	312
Interest cost		518		347		316
Amortization of net loss		13		278		215
Net periodic pension cost	$	864	$	1,024	$	843

The assumptions used in the valuation of the SRBAs are as follows:

	Measurement Date
	September 30,			October 1,			October 2,
	2023			2022			2021
Assumptions at year-end:
Discount rate		5.25	%		4.50	%		2.75	%
Rate of increase in compensation levels		3.00	%		3.00	%		3.00	%

The assumed discount rate is established as of our fiscal year-end measurement date. In establishing the discount rate, we review published market indices of high-quality debt securities, adjusted as appropriate for duration, and high-quality bond yield curves applicable to the expected benefit payments of the SRBAs. The SRBAs expected rate of increase in compensation levels is based on the anticipated increases in annual compensation.

The projected benefit payments under the SRBAs are as follows:

Fiscal year(s)			In thousands
2024			$	611
2025				930
2026				855
2027				855
2028				855
2029	-	2033		4,745

Retirement savings plan. In 1996, we adopted the Retirement Savings Plan of Insteel Industries Inc. (the “Plan”) to provide retirement benefits and stock ownership for our employees. The Plan is an amendment and restatement of our Employee Stock Ownership Plan. As allowed under Sections 401(a) and 401(k) of the Internal Revenue Code, the Plan provides for tax-deferred salary deductions for eligible employees.

The Plan allows for discretionary contributions to be made by us as determined by the Board of Directors, which are allocated among eligible participants based on their compensation relative to the total compensation of all participants. Employees are permitted to contribute up to 75% of their annual compensation to the Plan, limited to a maximum annual amount as set periodically by the Internal Revenue Code. We match employee contributions up to 100% of the first 1% and 50% of the next 5% of eligible compensation that is contributed by employees. Our contributions to the Plan were $1.7 million in 2023, $1.7 million in 2022 and $1.5 million in 2021.

Voluntary Employee Beneficiary Associations (“VEBA”). We have a VEBA which allows both us and our employees to make contributions to pay for medical costs. Our contributions to the VEBA were $6.5 million in 2023, $5.4 million in 2022 and $6.4 million in 2021. We are primarily self-insured for our employee’s healthcare costs, carrying stop-loss insurance coverage for individual claims in excess of $175,000 per benefit plan year. Our self-insurance liabilities are based on the total estimated costs of claims filed and claims incurred but not reported, less amounts paid against such claims. We review current and historical claims data in developing our estimates.