Sponsors Continue Trend of Earlier DC Plan Eligibility

December 21, 2009 (PLANSPONSOR.com) – Employers are not only urging employees to join their retirement savings plans, but a new study indicates more companies are allowing workers to get started right away.

A news release from the Profit Sharing/401k Council of America (PSCA) said its latest eligibility survey for defined contribution plans found 57.4% of plans surveyed allow immediate 401(k) participation – more than twice the 24% from 1998. Some 15.4% had a three-month eligibility period, while 9.4% used six months.

Some 71.1% of plans with 1,000 or more workers now permit employees to get in their 401(k) right after they have been hired.

PSCA said 75.8% of companies (and 85.5% of firms with 1,000 or more workers) allow employees into the plan after 90 days. Only 11.5% of all plans have a one-year or longer service requirement prior to eligibility.

The news release said 72.3% of the plans surveyed offer employer matches while 56.1% of companies make non-matching contributions to employee accounts.