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The not-for-profit Plan Sponsor Council of America (PSCA) released its
54th Annual Survey of Profit Sharing and 401(k) Plans in October 2011, reporting on the 2010 plan year experiences of 820 defined contribution plans with 10.5 million participants and more than $691 billion in plan assets. Plans in the survey represent companies of all sizes and regions across the United States.
The findings demonstrate the growth of target-date funds and Roth 401(k) options, showing that participant use of both, when available, has increased significantly:
“Recently, added design features are proving popular with participants,” said David Wray, PSCA president. “More of them are taking advantage of the employer-provided investment allocation programs and diversifying their tax advantages.”
Below are highlights from the survey:
Participants’ assets are most frequently invested in:
Actively managed domestic equity (stock) funds
25.1% of assets
Stable value funds
Indexed domestic equity funds
Actively managed international equity funds
41.8 percent of plans have an automatic enrollment feature. Of those plans that have it, 82.3 percent use it exclusively to enroll new hires. Only 17.7 percent use it annually to enroll currently employed nonparticipants who do not opt out. The most common default deferral is 3 percent of pay, and the most common default investment option is a target-date fund.
Profit-sharing plans tend to offer the most generous employer contributions, averaging 6.8 percent of an employee's pay. The average company contribution in 401(k) plans is 2.3 percent of pay and in combination plans it is 4.6 percent of pay.
14.7 percent of plans allow company stock as an investment option for participant and employer contributions, and 3.2 percent of plans allow company stock as an investment option for employer contributions only.
89 percent of U.S. employees at respondent companies are eligible to participate in their employer’s defined contribution plan. Most companies allow employees to begin contributing to the plan immediately on hire (59.2 percent of companies). Companies are more likely to have a one-year service requirement for nonmatching employer contributions than for matching employer contributions.
Hardship withdrawals are permitted in 89 percent of 401(k), 85.8 percent of combination and 4.5 percent of profit-sharing plans. Only 1.9 percent of participants took a hardship withdrawal in 2010 when permitted—the same percentage as in 2009.
Plans offer an average of 18 funds for participant and company contributions. The funds most commonly offered to participants are actively managed domestic equity (stock) funds, actively managed international equity funds, indexed domestic equity funds and actively managed domestic bond funds.
67.9 percent of companies retain an independent investment advisor to assist with fiduciary responsibility.
Investment advice is offered by 57.6 percent of respondent companies; 22.3 percent of participants used advice when it was offered.
Loans are permitted in 88.8 percent of 401(k), 89.4 percent of combination, and 23.8 percent of profit sharing plans. 52.8 percent of plans with loans permit only one loan at a time.
Loan use has not changed much in the past 10 years and remains at about 24 percent of eligible participants.
The average percentage of eligible employees who have a balance in the plan is 86.3 percent. An average of 76.9 percent of eligible employees made contributions to the plan in 2010, when permitted.
45.5 percent allow participants to make Roth after-tax contributions; 16.1 percent of participants made Roth contributions when offered the opportunity.
63.6 percent of plans offer a target-date fund as an investment option. The average allocation of plan assets increased 30 percent from 2009 to 13.0 percent.
37.3 percent of plans provide immediate vesting for matching contributions, while 23.3 percent provide immediate vesting for profit-sharing contributions.
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