Participation Rate Stayed Steady

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The average participation rate in 401(k) plans was 82.3 percent at the end of 2009, according to the 53rd Annual Survey of Profit Sharing and 401(k) Plans by the Profit Sharing/401(k) Council of America (PSCA). The rate the year before was 82.7 percent. Small plans (1 to 49 participants) had a participation rate of 91.4 percent.

The pre-tax participant deferral rate averaged 5.2 percent for non-highly compensated employees and 6.7 percent for highly compensated employees.

Auto Enrollment Remained Popular

Nearly 40 percent of 401(k) plans had an automatic enrollment feature. It applied to new hires in 34 percent of these plans and to all non-participants in 6 percent of these plans.

The most common default deferral rate was 3 percent of pay (58 percent of plans). Target retirement date funds remained the most common default investment option (57 percent of plans).

Automatic increases in contribution rates were reported by 53 percent of plans. Most plans cap the auto increases at 6 percent of pay.

Roth Feature Usage Rose

Over 41 percent of plans permitted Roth 401(k) contributions, up from 37 percent the previous year. Of those eligible to make Roth contributions, 13 percent did so.

Investment Options Didn’t Change

The average number of investment choices offered to participants remained at 18.

Almost 63 percent of plans offered target date funds.

Investment Advice Grew

Advice was available in 60 percent of plans, up from 52 percent in the previous year’s survey. About 22 percent of participants used advice when offered. Small plans tended to have the highest usage.

Other Survey Results Included:

  • The typical plan had about 60 percent of assets invested in equities.
  • Less than 14 percent of plans offered company stock as an investment option.
  • Almost 86 percent of plans allowed hardship withdrawals, and about 2 percent of participants had such a distribution in 2009.
  • Loans were permitted in 90 percent of plans.
  • Almost 24 percent of plans used a safe harbor match, and 11 percent used a safe harbor non-elective contribution.
  • About 40 percent of plans offered immediate vesting of the company match.

The survey reflects 2009 experience of 931 plans with 8.6 million participants and more than $628 billion in plan assets.

The survey may be ordered from the PSCA at

Kmotion, Inc., P.O. Box 1456, Tualatin, OR 97062;

© 2011 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this publication are for general information only and are not intended to provide tax or legal advice or recommendations for any particular situation or type of retirement plan. Nothing in this publication should be construed as legal or tax guidance, nor as the sole authority on any regulation, law, or ruling as it applies to a specific plan or situation. Plan sponsors should always consult the plan’s legal counsel or tax advisor for advice regarding plan-specific issues.