Web Still Rules as Premier K Plan Cost Cutter

August 9, 2002 (PLANSPONSOR.com) - Plan sponsors have relied on their ability to administer their 401(k) plan online as the most effective way they have to control costs, according to a survey.

Sponsors participating in IOMA’s 2002 Controlling 401 (k) Plan Costs and Salary Survey cited the Web five times out of the top 10. Leading the way were Web-based investment changes at 37.4% overall, up from the 33.6% last year.

Other Web-based services that helped control costs in the top 10 responses given were:

  • investment education (24%), down a hair from the 24.3% who cited it last year
  • loans (22.9%), down somewhat from last year’s 26.3%
  • deferral changes, (19%), down notably from last year’s 25.9% figure
  • plan enrollment (16.8%), down from 20.6% last year.

In all but Web-based investment changes, 401(k) plan sponsors with 1,000 to 4,999 participants were much more likely to embrace Web-based technology and cited its effectiveness in cost control much more than other size groups.

Sponsors with 1,000 to 4,999 participants were nearly:

  • one-third again as likely as the overall percentage to offer Web-based investment education
  • more than one-third as likely to offer Web-based loans, at 39.5%
  • more than 60% more likely to offer Web-based deferral changes at 31.6%
  • nearly twice as likely to offer Web-based plan enrollment.

The only exception to the 1,000 to 4,999 sponsor-size dominance of Web-based 401(k) features was Web-based investment changes.

Across the board, private practice firms embraced Web-based services as a means to help control their 401(k) costs. About 54% of private practice firms use the Web for investment changes versus the 37.4% of firms overall that did.

Similar patterns held true for investment education (30.8% vs. 24.0%), loans (34.5% vs. 22.9%), deferral changes (38.5% vs. 19%), and plan enrollment (23.1% vs. 16.8%).