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Benchmark Your 401k Plan - 2012

How does your 401k plan compare with the "typical" 401k?

Many plan sponsors want to know how their 401k plan stacks up to the typical or average plan. This is often the first question asked when attempting to determine whether an effort should be made to upgrade the features and benefits of the plan.

To help you answer this question, we have identified some of the common performance characteristics and features offered by many 401k plans and compiled the statistics below from a variety of sources* that will allow you to benchmark your plan.

Asset Allocation

The average plan has approximately 60.6% of assets invested in equities. Assets are most frequently invested in actively managed domestic equity funds (24.8% of assets), target-date funds (12.4%), stable value funds (10.7%), indexed domestic equity funds (8.8%), and actively managed bond funds (8.0%).

Automatic Enrollment

Forty-five point nine (45.9) percent of plans have an automatic enrollment feature. The most common default deferral is 3% of pay, present in 53.9% of plans. Fifty-five point two (55.2) percent of plans with automatic enrollment automatically increase default deferral rates over time. The most common default investment option is a target-date fund, present in 69.7% of plans.

Catch-up Contribution

Catch-up contributions for participants aged 50 and older are permitted in 98.0% of plans. Thirty-one (31) percent of these plans offer a match on the catch-up contributions.

Company Stock

Only 15.5% (down from 17% last year) of plans allow company stock as an investment option for both participant and company contributions. Two point eight (2.8) percent of plans allow company stock as an investment option for company contributions only.


Short service requirements (less than three months of service) are now common for participant contributions. In 1998, only 24% of plans allowed employees to begin contributing to their 401k plans immediately upon employment.

Eighty-eight point four (88.4) percent of U.S. employees at respondent companies are eligible to participate in their employer's DC plan. More than half of respondent companies provide plan eligibility to all employee types. Most companies allow employees to begin contributing to the plan immediately upon hire (60.3% of companies). Forty-five point nine (45.9) percent of companies that provide a matching company contribution provide immediate eligibility to receive the match, while 28.2% require one year of service prior to eligibility to receive it.

Employee Participation Rate

Eighty-nine (89) percent of U.S. employees at companies offering a 401k program are eligible to participate. On average, 87.3% of eligible employees have a balance in the plan. Twenty-two point four (22.4) percent of plan participants are no longer actively employed by the plan-sponsoring company.

Employer Contributions

Companies contributed an average of 4.1% of participants' pay to the plan. Profit sharing plans tend to offer the most generous contributions, averaging 8.5% of pay. The average company contribution in 401k plans is 2.5% of pay and in combination plans it is 4.4% of pay. Nine-five point five (95.5) percent of plans that have a match provision in the plan, made the match in 2011, up from 91.0% in 2010.

Numerous formulas are used to determine company contributions. The most common type of fixed match, reported by 27% of employers, is $1.00 per $1.00 up to a specified percentage of pay (commonly 6%). Twenty-three (23%) of all plans match $0.50 per $1.00 up to a specified percentage of pay (most commonly 6%).

Hardship Withdrawals

Hardship withdrawals are permitted in 90.5% of 401k, 87.4% of combination, and 5.9% of profit sharing plans. One point eight (1.8) percent of participants took a hardship withdrawal in 2010, when permitted.

Investment Advice

Investment advice is offered by 57.8% of respondent companies. Nineteen point three (19.3) percent of participants used advice when it was offered. Participant usage tends to be greatest in small plans.

Investment Advisors

Sixty-eight point two (68.2) percent of companies retain an independent investment advisor to assist with fiduciary responsibility.

Investment Committee

Thirty-three (33) percent of plan sponsors have no investment committee, though it varies heavily by plan size. More than half the plans with less than $5 million in assets did not. Fewer than one in 10 of plans with more than $5 million in assets did not have such a body.

Investment Options

The number of funds offered to plan participants has leveled off after many years of steady increase. Plans offer an average of 19 funds for both participant contributions and for company contributions. The funds most commonly offered to participants are actively managed domestic equity funds (90.3% of plans), actively managed international equity funds (87.4% of plans), indexed domestic equity funds (82.8% of plans), and actively managed domestic bond funds (79.6% of plans). Sixty-eight point six (68.6) percent of plans offer target-date funds. The average allocation of plan assets in these target-date funds is 12.4%.

Investment Policy Statement

Ninety (90) percent of all plans have a written investment policy statement, but only about half of those with less than $5 million in assets do.


Loans are most prevalent in plans permitting participant contributions. They are permitted in 89% of 401k, 88.4% of combination, and 17.6% of profit sharing plans. Fifty-four (54) percent of plans with loans permit only one loan at a time.

Non-Qualified Supplements

Non-qualified supplements are rare in small plans, but common in more than two-thirds of large plans (69.3%).

Roth 401k

Among plans that permit participant contributions, 49% allow participants to make Roth after-tax contributions. Seventeen point four (17.4) percent of participants made Roth contributions when offered the opportunity. The average Roth deferral (from ADP test results) was 3.7% by lower-paid participants and 4.9% by higher-paid participants.

Self-directed Brokerage Accounts

Self-directed brokerage accounts are offered in 15.5% of plans, while open mutual fund windows are offered in 8.3% of plans. On average, plans invest 2.2% of plan assets through brokerage windows and 1.5% through mutual fund windows.

Safe Harbor Plan Design

Thirty-four point two (34.2) percent of plans have a Safe Harbor plan design in lieu of ADP/ACP testing.


Thirty-eight point nine (38.9) percent of plans provide immediate vesting for matching contributions, while 23.9% provide immediate vesting for profit sharing contributions. Among plans that do not have immediate vesting, graduated vesting is the most common arrangement for all contribution types.

* The most current studies and reports available have been used to compile the information. The following is a list of source material:

"55th Annual Survey of Profit Sharing and 401k Plans," published by Plan Sponsor Council of America in 2012

"54th Annual Survey of Profit Sharing and 401k Plans," published by Plan Sponsor Council of America in 2011

"401k and Profit Sharing Plan Eligibility Survey 2010," published by Plan Sponsor Council of America

"2010 Survey of DC Plan Sponsors," published by Towers Watson in 2011

"2009 Defined Contribution Survey," published by

"401k Plan Asset Allocation, Account Balances, and Loan Activity in 2011," published by Employee Benefit Research Institute and the Investment Company Institute

"Trends and Experience in 401k Plans 2009," published by Aon Hewitt


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