PSCA RELEASES ELIGIBILITY MINISURVEY

Trend data shows workers do not have to wait as long to participate in plans

CHICAGO (January 8, 2004) - PSCA has released its newest eligibility minisurvey, 401(k) and Profit Sharing Eligibility Survey 2003, which investigates the eligibility practices among 271 401(k) and profit sharing plans.

401(k) plans often available to workers right away
According to the findings, over half (51%) of 401(k) plans permit workers to participate within three months of their hire date. This is good news for workers, says David Wray, president of the Profit Sharing/401(k) Council of America. "Workers benefit from having early eligibility," says Wray. "Not only do they have a greater opportunity to save for retirement with fewer gaps in coverage, they are able to begin contributing without feeling the pinch that sometimes affects workers who enroll later on," he says.

401(k) eligibility trends, 1998 to 2003
Between 1998 and 2003, 401(k) eligibility periods of three months or less increased from 32% to 51%. Much of this increase is likely due to new employer incentives that took effect in 1999. Beginning in 1999, companies were allowed to exclude employees who were in their first year of employment from the ADP tests. Previously to 1999, granting early eligibility could easily result in difficulty passing the ADP tests, since new hires traditionally participate at lower rates than other workers.

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.