Employers Implement EGTRRA

February 11, 2002 (PLANSPONSOR.com) - Some 80% of employers are allowing employees, aged 50 and over, to make catch up contributions to their retirement plans this year, implementing the changes included in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), a survey finds.

Of these employers,

  • some 63% will do so by June 30, 2002,
  • while 31% will delay the move until the second half the year

The survey, by Hewitt Associates, also revealed that 16% of the sample is still considering adding the feature.

Hewitt also found that:

  • just over two thirds of plan sponsors plan to implement the higher defined contribution limits, now $40,000 or 100% of pay higher figures,
  • whereas 16% are still considering adding this feature

In addition, almost 30% of employers are considering adding automatic enrollment, in bid to boost participation rates.

Plan Design

Survey findings also show that:

  • some 47% of plan sponsors will increase their focus on account-based pension plans and defined contribution plans,
  • while another 17% of employers are considering this move,
  • some 46% will revise rollover procedures to accommodate employees who want to transfer IRA and after-tax contributions into their defined contribution plan,
  • while 17% are considering revising this procedure, and
  • almost 20% will implement a 529 college savings plan,
  • while 46% are considering doing so

Hewitt’s 2001 Employer Reaction to EGTRRA Legislation survey was conducted in November and December 2001 last year and comprises responses from 163 organizations.