CHICAGO (October 11, 2005) - The Profit Sharing/401(k) Council of America has released its 48th Annual Survey of Profit Sharing and 401(k) Plans, which provides the most up-to-date information available on current practices and trends in profit sharing and 401(k) plans. PSCA's annual survey reports on the 2004 plan year experience of 1,052 plans with over 9 million participants and more than $500 billion in plan assets. Plans represented in the survey are diverse, representing companies of all sizes and regions across the United States. The survey covers a wide variety of topics relevant to plan sponsors and the industry at large, including data on participation rates, catch-up contributions, company contributions, asset allocation, investment options, company stock, professional management, investment advice, automatic enrollment, and more. PSCA's annual surveys are frequently used by companies to provide benchmarks for their plans and by the government as a resource for public policy decisions. Below are some highlights from the survey: Employee participation
77.3% of eligible employees have balances in their 401(k) plans. Pre-tax participant deferrals average 5.4% of pay for non-highly compensated workers (as defined by the ADP tests) and 6.7% of pay for highly compensated workers. Company contributions
Company contributions average 4.5% of payroll. They are highest in profit sharing plans (8.2% of pay) and lowest in 401(k) plans (2.9% of pay). Numerous formulas are utilized to determine company contributions. In plans permitting participant contributions, the most common formula is a fixed match only, present in 31.2% of plans (including plans with safe harbor matches). The most common type of company contribution for profit sharing plans is a discretionary profit sharing contribution only, which is present in 65.3% of plans. For plans with fixed matches, the most common matches are $.50 per $1.00 up to the first 6% of pay (29.6% of plans), $1.00 per $1.00 up to the first 3% of pay (7.2% of plans) and $.25 per $1.00 up to the first 6% of pay (6.5% of plans). Catch-up contributions
Catch-up contributions for participants age 50 and over are permitted in 95.3% of plans. 28.7% of these offer a match on the catch-up contributions. The percentage of those making catch-up contributions ranged from 35.5% at the smallest companies to 14.8% at the largest. Investment Options
The number of funds offered to plan participants continues to increase. Plans offer an average of 18 funds for participant contributions, up from 17 funds in 2003 and 15 funds in 2002. The funds most commonly offered for participant contributions are actively managed domestic equity funds (77.8% of plans), actively managed international equity funds (71.2% of plans), balanced stock/bond funds (69.3% of plans), and indexed domestic equity funds (67.9% of plans). Asset allocation
The typical plan has approximately 65% of assets invested in equities. Assets are most frequently invested in actively managed domestic equity funds (31.7% of assets), indexed domestic equity funds (10.3%), stable value funds (9.7%), and balanced stock/bond funds (9.6%). Investment advice
Advice is offered in 56.6% of plans, up from 54.1% in 2003, 51.9% in 2002 and 41.4% in 2001. Of companies providing investment advice, the most common methods of delivery are one-on-one counseling (56.3% of plans), internet providers (53.5%), and telephone hotlines (34.35%). Smaller companies most frequently use one-on-one counseling (64.3%), while larger companies tend to use internet providers (82.5%). 27.6% of participants used advice when it was offered. Participant usage tends to be greatest in the smaller plans. Self directed accounts
Self directed brokerage windows are offered in 15.6% of plans, while open mutual fund windows are offered in 7.3% of plans. 0.5% of plan assets are invested through brokerage windows and 0.3% of plan assets are invested through mutual fund windows. Automatic enrollment
10.5 % of respondents have automatic enrollment, up from 8.4% in 2003. Automatic enrollment is most common in large plans – 30.6% of plans with 5,000 or more participants report having automatic enrollment, while only 0.9% of plans with fewer than 50 participants have automatic enrollment. Vesting
Immediate vesting is present in 29.54% of 401(k), 10.6% of profit sharing, and 30.6% of combination plans. Graduated vesting tends to be the most common arrangement for all plan types. |