29% Chose Deferral Higher than Default

April 2, 2013 (PLANSPONSOR.com) - Five percent of Section 401(k) plans include an automatic contribution arrangement (ACA), according to the Internal Revenue Service (IRS) 401(k) Compliance Questionnaire.

Very large and large plans are more likely than medium or small plans to have an automatic contribution arrangement.    

According to the IRS’s final report of responses from its Questionnaire, 43% of participants subject to an ACA deferred at the default rate, while 29% elected a rate higher than the default rate.Twenty-one percent elected not to make elective deferrals, and 7% elected a rate less than the default rate.  

The Internal Revenue Service’s (IRS) final report of responses from its 401(k) Compliance Check Questionnaire includes results reported in the Interim Report (see “IRS Issues Interim Report About 401(k) Compliance Questionnaire”). The Interim Report projected 401(k) Questionnaire findings to the Section 401(k) plan sponsor population that files Form 5500.  

The final report also includes: 

  • Additional analysis of the 401(k) Questionnaire not included in the Interim Report; 
  • A new section about Automatic Contribution Arrangements;  
  • Stratified data highlighting differences in the results based on plan size; and 
  • Updates to the data included in the Interim Report to address questions from the retirement plan community. 


The final report is at http://www.irs.gov/pub/irs-tege/401k_final_report.pdf.