According to the 45th Annual Survey of Profit Sharing and 401(k) Plans from the Profit Sharing/401(k) Council of America (PSCA), 70% of plans offer 10 fund choices or more – up from 61.5% in 2000 and 51.2% in 1999. Fund lineups average 15 options, the study found.
The most common lineup includes: active domestic equity funds (76.1% of plans), active international equity funds (71.4% of plans), indexed domestic equity funds (63.9% of plans) and balanced stock/bond funds (63.8% of plans).
The PSCA survey found that the typical plan has approximately 64% of assets invested in equities. Assets are most frequently invested in:
- active domestic equity funds (30.9% of assets)
- stable value funds (11.8%)
- indexed domestic equity funds (11.0%)
- balanced stock/bond funds (8.5%)
- company stock (6.6%).
Figuring a Company Match
In plans allowing participant contributions, the most common company match formula is a fixed match only, in 29.1% of plans (including plans with safe harbor matches). The most common type of company contribution for profit sharing plans is a discretionary profit sharing contribution only, which is present in 70.9% of plans.
For plans with fixed matches, the most common formula is:
- $0.50 per dollar up to the first 6% of pay (26% of plans)
- $0.50 per dollar up to the first 4% of pay (7.6% of plans)
- $0.25 per dollar up to the first 6% of pay (8% of plans).
Other highlights of the PSCA survey include:
- Deferral amounts for non-highly compensated workers averaged 5.4% of pay while highly compensated employees deferred, on average, 6.4%. The average deferral was $3,514 in 2001.
- Company contributions average 4% of payroll. They are highest in profit sharing plans (8.1% of pay) and lowest in 401(k) plans (2.5% of pay).
- Advice is offered most frequently at small companies and least frequently at large companies. Advice is offered in 55.5% of plans with fewer than 50 participants, but only in 25.7% of plans with 5,000 or more participants. Of companies providing investment advice, the most common methods of delivery are one-on-one counseling (52.7% of plans), Internet providers (38.3%) and telephone hotlines (27.1%). Smaller companies generally use one-on-one counseling (74.3%), while larger companies tend to use Internet providers (58.1%).
- Self directed brokerage windows are offered in 11.4% of plans, while open mutual fund windows are offered in 7.7% of plans. 0.2% of plan assets are invested through brokerage windows and 0.1% of plan assets are invested through mutual fund windows.
- Some 9.1% of respondents have automatic enrollment, up from 8.1% of plans in 2000. Automatic enrollment is most common in large plans – 17% of plans with 5,000 or more participants report having automatic enrollment, while only 3.5% of plans with fewer than 50 participants have it.
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