CHICAGO (October 5, 2004) - The Profit Sharing/401(k) Council of America has released it's 47th 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 2003 plan year experience of 1,161 plans with over 3.4 million participants and more than $412 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
76.4% of eligible employees have balances in their 401(k) plans. Pre-tax participant deferrals average 5.2% of pay for non-highly compensated workers (as defined by the ADP tests) and 6.4% of pay for highly compensated workers. Company contributions
Company contributions average 4.4% of payroll. They are highest in profit sharing plans (9.3% of pay) and lowest in 401(k) plans (3.0% 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 33.7% 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 68.7% of plans. For plans with fixed matches, the most common matches are $.50 per $1.00 up to the first 6% of pay (28.2% of plans), $1.00 per $1.00 up to the first 3% of pay (7.1% of plans) and $.25 per $1.00 up to the first 6% of pay (7.1% of plans). Catch-up contributions
Catch-up contributions for participants age 50 and over are permitted in 95.3% of plans. 24.6% of these offer a match on the catch-up contributions. 23.8% of participants who were eligible to make catch-up contributions in 2003 did so. Investment Options
The number of funds offered to plan participants continues to increase. 87.3% of plans offer 10 or more funds for participant contributions, up from 80.8% in 2002 and 69.8% in 2001. Plans offer an average of 17 funds for participant contributions. The funds most commonly offered for participant contributions are actively managed domestic equity funds (73.7% of plans), actively managed international equity funds (69.3% of plans), balanced stock/bond funds (67.9% of plans), and indexed domestic equity funds (62.5% of plans). Asset allocation
The typical plan has approximately 63% of assets invested in equities. Assets are most frequently invested in actively managed domestic equity funds (31.2% of assets), balanced stock/bond funds (11.3%), stable value funds (9.8%), indexed domestic equity funds (9.3%), and cash equivalents (6.8%). Investment advice
Advice is offered in 54.1% of plans, up from 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 (56.2% of plans), internet providers (52.2%), and telephone hotlines (31.5%). Smaller companies generally use one-on-one counseling (70.1%), while larger companies tend to use internet providers (75.5%). 30.6% of participants used advice when it was offered. This percentage has remained level for the past few years, with 31.1% using advice in 2002 and 2001, and 30.9% using advice in 2000. Participant usage tends to be greatest in the smaller plans. Self directed accounts
Self directed brokerage windows are offered in 13.0% of plans, while open mutual fund windows are offered in 6.1% of plans. 0.7% of plan assets are invested through brokerage windows and 0.1% of plan assets are invested through mutual fund windows. Automatic enrollment
8.4% of respondents have automatic enrollment. Automatic enrollment is most common in large plans – 24.2% of plans with 5,000 or more participants report having automatic enrollment, while only 1.1% of plans with fewer than 50 participants have automatic enrollment. Vesting
Immediate vesting is present in 39.4% of 401(k), 15.4% of profit sharing, and 23.8% of combination plans. Graduated vesting tends to be the most common arrangement for all plan types. |