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401(k) Stats: Benchmarks for Plan Sponsors

By Stephen Miller  10/5/2009
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The Profit Sharing/401k Council of America (PSCA) has released its 52nd Annual Survey of Profit Sharing and 401(k) Plans, reporting on the 2008 plan year experiences of 908 defined contribution plans with 7.4 million participants and more than $600 billion in plan assets.

Plans represented in the survey are diverse, belonging to companies of all sizes and regions across the United States. Below are highlights from the survey.

Automatic Enrollment
Following a big increase in 2007, the rate of addition of automatic enrollment continued but slowed: 39.6 percent of all plans and more than half of large plans used automatic enrollment.

Asset Allocation
The typical plan had approximately 60 percent of assets invested in equities, down only 5 percent from 2007.


Participants’ assets were most frequently invested in:

Actively managed domestic equity funds

23.1% of assets

Stable value funds


Target retirement date funds


Indexed domestic equity funds


Actively managed international equity funds


Balanced stock/bond funds



Company Contributions
Company contributions averaged 4.1 percent of payroll, the same as in 2007. They were highest in profit-sharing plans (9.3 percent of pay) and lowest in 401(k) plans (2.9 percent of pay). One percent of respondents indicated that they suspended their employer match.

Numerous formulas are used to determine company contributions. In plans permitting participant contributions, the most common formula is a fixed match only, present in 24 percent of plans:

Among plans with fixed matches, half of plans match 50 cents per dollar, most commonly up to the first 6 percent of pay (29 percent of plans).

Among profit-sharing plans, the most common type of company contribution is a discretionary profit-sharing contribution only, which is present in 67.9 percent of plans.

Employee Participation
Almost 83 percent of eligible employees had balances in their 401(k) plans, up from 81.9 percent in 2007. Pretax participant deferrals average 5.5 percent of pay for non-highly compensated workers and 6.6 percent of pay for highly compensated workers.

Investment Options
The number of funds offered to plan participants has plateaued. Plans offer an average of 18 funds for participant contributions.

Fund types most commonly offered for participant contributions were:

Actively managed domestic equity funds

81.3% of plans

Actively managed international equity funds


Indexed domestic equity funds


Actively managed domestic bond funds


Investment Fund Structure
Overwhelmingly, money is managed in mutual funds, although large companies use collective trusts and separately managed accounts.

Investment Advice
The availability of investment advice continues to increase; for the first time, more than half of plans (51.8 percent) offered investment advice to participants. More small companies offered investment advice than large companies.

Small Pre-Retirement Distributions
Half of plans transferred balances between $1,000 and $5,000 to an individual retirement account (IRA), and balances of less than $1,000 were paid out. Forty percent of plans retained balances of more than $1,000 in the plan. Ten percent retained all small balances in the plan.

Roth 401(k)
Nearly 37 percent of plans permitted Roth 401(k) contributions, up from 30.3 percent in 2007. Of participants eligible to make Roth contributions, 15.6 percent were doing so.

Target-Date Funds
The availability and use of target-date funds continued to grow: 57.7 percent of plans offered them, and 91.6 percent of companies offering target-date funds use a packaged product. Large companies are most likely to customize their funds.

Self-Directed Accounts
Self-directed brokerage windows were offered in 15.5 percent of plans, while open mutual fund windows were offered in 8.3 percent of plans. On average, plans invested 2.2 percent of plan assets through brokerage windows and 1.5 percent through mutual fund windows.

Safe Harbor Plan Design
Over 23 percent of plans offered a safe harbor match, and 6 percent offered an elective safe harbor contribution. Of plans that offered a safe harbor match, 30.4 percent offered the automatic enrollment safe harbor match.

Immediate vesting was present for matching contributions in 37.1 percent of plans and for non-matching contributions in 26.1 percent of plans. Among plans that do not have immediate vesting, graduated vesting tended to be the most common arrangement for all plan types.

Staying on Course

“Even in this economic period, 401(k) plan sponsors remain committed to improving their plans, and participants continued to save and invest for the long term,” says PSCA President David Wray.

In a study of its 11.2 million accounts, Fidelity Investments found that, for the second quarter of 2009, 5 percent of participants had increased their contributions while 3 percent had reduced them, Wray points out. “401(k) participants have continued to be net buyers of equities during this entire period as over half of all new 401(k) contributions go to purchase stocks,” he notes.

A big reason why participants are continuing to save through their employer-sponsored defined contribution plan, Wray says, is that plan sponsors remain dedicated to providing participants with education and communication materials, “and it has made a difference.” Concludes Wray, “401(k) participants continue to dollar-cost average into their plans and are committed to diversifying their investments. Tens of thousands of professionals are working every day to help these participants save for their future.”

Stephen Miller is an online editor/manager for SHRM.

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