2015 seems to have been an active year for the outright bashing of 401(k) plans. Plan participants and the companies which offer the plans have been both scoffed at and vilified in the press and on social media for a variety of reasons – some founded and others being less reliable. However, there are usually two sides to every opinionated story and in the case of the 401(k) plan bashings during 2015, the opposition to that bashing surfaces in the form of original and reputable research conducted by the Plan Sponsor Council of America in their 58th Annual Survey. A preview of the data is contained within the recent research from PSCA. The research is being published as Plan Sponsor Council of America’s 58th Annual Survey of Profit Sharing, and 401(k) Plans. The 58th annual survey reports on the 2014 plan-year experiences of just under 600 plans and includes over 8 million participants and $785 billion in plan assets.
By examining the data, the researchers discovered:
- Almost all full-time employees are eligible to participate in the plan.
- Approximately half of plans allow part-time employees to participate.
- More than 50% of plans responding do not have a service requirement to receive matching contributions.
- Over 60 percent of plans permit Roth contributions;
- Approximately 25% of plans suggest a deferral rate to plan participants. For half of those plans, they do suggest a deferral rate. Of those, half suggest a deferral rate higher than 6 percent.
- More than 80 percent of plans use a qualified default investment option. The QDIA is a target-date fund in three-fourths of these plans.
- Approximately, 70 percent of large plans (with 5,000 or more participants) use automatic enrollment.
The above findings are reason to believe that the private pension system is alive-and-well in how it services American workers and their families in their golden years of retirement.
