PSCA RELEASES ROTH 401(k) MINISURVEY

17.4 percent of 401(k) plan sponsors intend to add Roth feature; 40.9 percent still undecided

CHICAGO (October 26, 2005) - PSCA has released its newest mini-survey, Roth 401(k) Minisurvey 2005, which investigates 401(k) plan sponsors’ attitudes and intentions towards adding a Roth 401(k) feature to their existing 401(k) plan.

Background:
The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) contains a provision enabling qualified 401(k) plans to permit plan participants to designate elective deferrals as “Roth” contributions beginning in 2006. Like contributions made to a Roth IRA, participant contributions to a Roth 401(k) plan are made with after-tax money, and the investment returns on these contributions are tax-free.

Percent of plans adding Roth 401(k)
17.4 percent of companies surveyed intend to add a Roth 401(k) feature to their 401(k) plan. 35.1 percent do not intend to add a Roth feature, and 40.9 percent are still undecided. The remaining 6.6 percent of respondents reported that they had not thought about adding a Roth 401(k) feature to their plan.

Timeframe for adding Roth 401(k)
Among companies planning to add a Roth feature to their 401(k) plan, 41.9 percent plan to add the Roth on Jan. 1, 2006, 54.1 percent plan to add the feature later on in 2006, and 4.1 percent say they will add the feature in 2007 or later.

Concerns about adding a Roth 401(k)
Among companies not planning to add a Roth 401(k), the top reasons include additional administrative burden (64.4 percent), concerns about additional participant education (58.4 percent), lack of participant demand (55.7 percent), concerns about EGTRRA sunset (41.6 percent), and insufficient regulatory clarification (38.9 percent).

The Profit Sharing/401(k) Council of America (PSCA), a national non-profit association of 1,200 companies and their 6 million employees, advocates increased retirement security through profit sharing, 401(k) and related defined contribution programs to federal policymakers and makes practical assistance with profit sharing and 401(k) plan design, administration, investment, compliance and communication available to its members. PSCA, established in 1947, is based on the principle that “defined contribution partnership in the workplace fits today’s reality.” PSCA's services are tailored to meet the needs of both large and small companies with members ranging in size from Fortune 100 firms to small, entrepreneurial businesses.