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How Does Your 401(k) Measure Up?

The Profit Sharing/401k Council of America’s 54th Annual Survey of Profit Sharing and 401k Plans provides an in-depth look at current practices in profit-sharing and 401(k) plans. 

Eligibility: Respondents reported that 89.0 percent of their U.S. employees were eligible to participate in their defined contribution plan. Nearly 60 percent of companies allow employees to start contributions immediately after hire. 

Participation: An average of 86.3 percent of eligible employees have a balance in their employer’s plan. A slightly lower percentage, 76.9 percent, made contributions during 2010, when permitted.  

Automatic Enrollment: More than 40 percent of plans now have automatic enrollment, a dramatic increase over a few years ago. The most common default deferral is 3 percent of pay, and the most common default investment option is a target-date fund. 

Company Contributions and Vesting: Company contributions to 401(k) plans averaged 2.3 percent of pay. 37.3 percent of plans provide immediate vesting for matching contributions; 23.3 percent provide immediate vesting for profit-sharing contributions.

Company Stock: 14.7 percent of plans allow company stock as an investment option for both participant and company contributions; 3.2 percent allow company stock as an investment option for company contributions only. 

Investment Options: Plans offer an average of 18 funds for both participant and company contributions. The most common are actively managed domestic equity funds, actively managed international equity funds, indexed domestic equity funds, and actively managed domestic bond funds. 63.6 percent of plans now offer a target-date fund.

Roth 401(k): Nearly half of plans (45.5 percent) allow participants to make Roth after-tax contributions. 

Investment Advisors: 67.9 percent of companies retain an independent investment advisor to assist with fiduciary responsibility.

Investment Advice: Nearly 60 percent (57.6 percent) of respondent companies offer investment advice to employees, with 22.3 percent of participants using advice when offered. 

Loans and Hardship Distributions: Similar percentages of plans offer loans and hardship distributions (88.8 percent and 89 percent, respectively).

For more information on 401(k)s and other retirement plan options, please contact us.  

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