Close Close
Sign In
Newsletters
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
Podcast Center Video Center Webcasts Resource Center Events
About ThinkAdvisor Contact Us Advertise With Us Asset & Logo Licensing Sitemap Terms of Service Privacy Policy Copyright © 2024 ALM Global, LLC. All Rights Reserved.
ThinkAdvisor

Retirement Planning > Saving for Retirement

401(k) Participation Slipped Last Year

By Matt Brady

X
Your article was successfully shared with the contacts you provided.

401(k) Participation Slipped Last Year

By

Despite a recovery in the stock market, fewer employees were participating in 401(k) retirement plans last year, according to a recent study.

Conducted as an annual survey by the Profit Sharing/401(k) Council of America, the study shows that 76% of eligible employees participated in their company’s 401(k) plans in 2003, down from 80% in 2002. The study was compiled from the responses by sponsors of nearly 1,200 retirement plans of various sizes. Combined, the respondents’ plans represented over 3.4 million participants and held assets worth about $12 billion.

David Wray, president of the PSCA, noted that the declining participation may also be an indication that employers have begun to look beyond such plans when offering retirement savings programs. Additionally, he said, many are taking advantage of opportunities afforded them by Congress, most notably in the Economic Growth and Tax Relief Reconciliation Act of 2001.

“According to this year’s survey results, plan sponsors are taking advantage of many of the beneficial changes in EGTRRA 2001,” Wray said, adding that sponsors “are moving to results-based solutions like investment advice and professionally managed accounts and have returnedcompany contributions to normal levels.”

Signed into law by President Bush in June of 2001, EGTRRA increased the allowed amount an individual can contribute to their retirement plan, and also provided a special “catch up” provision allowing individuals over 50 to contribute even greater amounts in one taxable year.

The study showed that employer contributions rose on average to 3% of pay, a slight increase, but still short of the 1999 level of 3.3%, which occurred before the stock market decline began eroding companies’ profitability.

While the number of employees participating in their 401(k)s has declined, the number of funds being offered has increased. Plans offered an average of 17 funds to participants last year, compared with only 15 in 2002.

Reproduced from National Underwriter Edition, October 28, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.