To attract and retain talented employees, employers should be aware of how their retirement plan provisions compare to other employers. If you are an employer and have not benchmarked your retirement plan provisions, now is a good time to do so. Each year Deloitte publishes the results of its Annual 401(k) Benchmarking Survey. You can obtain a copy of the survey results by clicking this link (Deloitte Benchmarking Survey). The following are some highlights regarding competitive provisions in 401(k) plans:
- 58% of respondents have no waiting period for eligibility and less than 15% have waiting periods longer than 3 months.
- 53% of respondents have a Roth 401(k) feature and 15% more are considering it.
- 67% of respondents made some sort of matching contribution, 4% made some sort of profit sharing contribution, and 23% made both. Only 6% of respondents made neither matching contributions nor profit sharing contributions.
- 56% of respondents have no waiting period for eligibility for matching contributions.
- The most popular matching formula (21% of respondents) is 50% of the first 6% of employee contributions. The second most popular (10% of respondents) is 100% of the first 6% of employee contributions.
- 59% of respondents increased their matching contribution formula.
- 81% of respondents that have a profit sharing provision made a profit sharing contribution.
- 93% of respondents let employees direct the investment of profit sharing contributions.
By Rex Platt, CPA