PSCA: Most Plans Offer at least 10 Funds

October 8, 2002 ( - Participants in profit sharing and 401(k) plans have more investment choices from which to choose than they did in past years, an industry survey found.

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.