The profit sharing/401k Council of America (PSCA), a national nonprofit association committed to retirement savings through employee-sponsored defined contribution programs, has released its 52nd 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.The survey of 2008 plan years covers a wide variety of topics relevant to plan sponsors and the industry at large. Below are some of the highlights from the survey:
• Automatic Enrollment: 40% of all plans and more than half of large plans currently use automatic enrollment.
• Asset Allocation: The typical plan has approximately 60% of assets invested in equities.
• Company Contributions: Company contributions average 4% of payroll, the same as in 2007. They are highest in profit sharing plans (9% of pay) and lowest in 401(k) plans (3% of pay). Only 1% of respondents indicated that they suspended their employer match. Among profit sharing plans, the most common type of company contribution is a discretionary profit sharing contribution, which is present in 65.
• Employee Participation: 82% of eligible employees have balances in their 401(k) plans.
• Investment Options: Plans offer an average of 18 funds for participant contributions.
• Roth 401(k): 37% of plans permit Roth 401(k) contributions.
• Target-Date Funds: The availability and use of target-date funds continues to grow. 58% of plans now offer them.
• Vesting: Immediate vesting is present for matching contributions in 37% of plans and for non-matching contributions in 26% of plans. Among plans that do not have immediate vesting, graduated vesting tends to be the most common arrangement for all plan types.
President of PSCA, David Wray, states “Even in this economic period, plan sponsors remain committed to improving their plans. Participants continue to invest and save for the long-term.”
