Benefits September 26, 2007

PSCA Poll Paints Annual Portrait of Profit Sharing, 401(k) Landscape

September 26, 2007 (PLANSPONSOR.COM) - Some 77.7% of eligible employees have balances in their 401(k) plans with deferrals averaging 5.4% of pay for non-highly compensated workers and 6.9% for their highly compensated counterparts, according to the latest industry survey by the Profit Sharing/401k Council of America (PSCA).
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A PSCA news release said its latest study reports on the 2006 plan year experience of 1,000 plans with more than six million participants and more than $600 billion in plan assets.

According to the announcement, other survey highlights include:

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  • Following the big increase of 2005, a large number of plans of all sizes added automatic enrollment in 2006. Usage is now common in large plans where 41.3% have adopted the feature.
  • Company contributions average 4.7% of payroll. They are highest in profit sharing plans (9.2% of pay) and lowest in 401(k) plans (3% of pay). In plans permitting participant contributions, the most common formula is a fixed match only, present in 29.5% of plans (including plans with safe harbor matches). For plans with fixed matches, the most common matches are $.50 per $1 up to the first 6% of pay (32.2% of plans), $1 per $1 up to the first 4% of pay (9.8%) and $1 per $1 up to the first 3% of pay (8.5%).
  • The number of fund options has plateaued. Plans offer an average of 19 funds, up from 18 in 2004 and 17 in 2003. Most commonly plans are offering actively managed domestic equity funds (78.8%), actively managed international equity funds (75.8% of plans), indexed domestic equity funds (71.8% of plans), and balanced stock/bond funds (64.8%).
  • The typical plan has approximately 70% of assets invested in equities. Assets are most frequently invested in actively managed domestic equity funds (30.6%), indexed domestic equity funds (10.3%), balanced stock/bond funds (8.2%), and stable value funds (8.9%).
  • Immediate vesting is present for matching contributions in 39.5% of plans and for non-matching contributions in 20% of plans. Among plans that do not have immediate vesting, graduated vesting tends to be the most common arrangement for all plan types.
  • 18.4% of plans permit Roth 401(k) contributions. 11.6% of those eligible are doing so.
  • Catch-up contributions for participants aged 50 and older are permitted in 98% of plans. 31% of these plans offer a match on the catch-up contributions.
  • Self-directed brokerage windows are offered in 13.6% of plans, while open mutual fund windows are offered in 5.6% of plans. 1.9% of plan assets are invested through brokerage windows, and 1.6% of plan assets are invested through mutual fund windows.

The survey is available online here or by calling (312) 419-1863.

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