Survey Finds 401(k) Eligibility Gains

February 1. 2008 (PLANSPONSOR.COM) - More employers are allowing workers to join their 401(k) plan earlier, a new Profit Sharing/401k Council of America (PSCA) minisurvey shows.

A PSCA news release said its latest eligibility minisurvey found the number of 401(k) plans allowing immediate eligibility more than doubled to 51% last year from 24% in 1998, Some 63.8% of plans with 1,000 or more employees now permit immediate 401(k) participation.

According to the PSCA, 70.5% of 401(k) plans permit workers to participate within three months of their hire date, up from 69.2% a year earlier. The survey covers 405 401(k) plans.

PSCA found that for matching contributions there is a trend away from one-year eligibility requirements. In 2007 only about a third (35.8%) required one year of service or longer for matching contribution eligibility. By a slight majority (51.7%), most employers still require that employees work for the company one year or longer to be eligible for non-matching company contributions.

Age Requirement

A large percent of plans (42.1%) have no minimum age requirement for plan participation, though a slightly smaller number (37.5%) have no age restriction for non-matching company contributions. 21 is the most prevalent age requirement, though one-in-five (20.8%) require a person to be 18 before they can participate in the plan.

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