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Recent research by Cerulli Associates focuses on what the Boston-based research firm calls the “bookends” of the 401(k) market–large and mega-plans and micro- and small plans–which collectively represent 95% of 401(k) industry assets. Cerulli found that the number of 401(k) plans grew in 2008 to an estimated 490,000, up 40.8% since the beginning of the decade. The traditional DB plan held steady during the same period, yet is down substantially since 1985 when there were 114,000 corporate DB plans sponsored. Yet, Cerulli says that despite the 401(k) plans’ popularity, many firms have had difficulty making it a profitable venture. Even with 65% of 401(k) assets, large and mega plans face challenges. The top three trends identified by Cerulli analysts that will change large and mega plans during the next five years are institutional investment vehicles, custom target-date funds, and regulation. Although less than a quarter of the total market for 401(k) assets is found in the micro- and small-plan segments, they represent 98% of 401(k) plans as of year-end 2007, Cerulli says. The top three trends that will change these markets over the next five years, Ceurlli says, are the proliferation of takeaway business, the modifications to current business models, and the move to fee transparency.

Fred Reish, a partner at the Reish Luftman Reicher & Cohen law firm in Los Angeles, was recently awarded the American Society of Pension Professionals & Actuaries (ASPPA) 401(k) Leadership Award. The award is sponsored by Morningstar and acknowledges a specific accomplishment or contribution by an individual or group of professionals working with the 401(k) industry each year. PlanSponsor magazine named Reish as one of 15 Legends in the Development of Retirement Plans. Reish regularly provides expert testimony to Congress about retirement and employee benefits issues. According to ASPPA, Reish is a past recipient of the Internal Revenue Service Director’s Award and is widely recognized as one of “The Best Lawyers in America.”

A new Spectrem Group study found that 34% of U.S. employers have reduced or eliminated matching contributions to their defined contribution retirement plans–including 401(k)s and 403(b)s–since January 2008. The report, Plan Sponsor Attitudes at the End of a Tumultuous Year, found that over the next 12 months, 29% of plan sponsors intend to reduce or eliminate matching contributions. George Walper, president of Spectrem Group, said in a prepared statement that the reduction or elimination of matching contributions, combined with a decline in deferral rates, “raises questions about the ability of the current generation of working Americans to adequately fund their retirements.” A second Spectrem report, Participants’ Attitudes at the End of a Tumultuous Year, found that 20% of employees participating in defined contribution plans have decreased the percentage of earnings they contribute to the plans, with another 5% intending to do so over the next 12 months. The Plan Sponsors report is based on the online polling of over 150 plan sponsors nationwide in February 2009 and has a margin of error of plus or minus 8 percentage points. The participants’ Attitudes study is based on online polling of 400 active retirement plan participants nationwide in February 2009 and has a margin of error of plus or minus 4.9 percentage points.


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