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5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
From Spencer's Benefits Reports: The vast majority of employers (97%) believe that their employees value health insurance as an important benefit, with 401(k) plans as the next most valued benefit by their employees (82%). Disability insurance, life insurance, and a company-funded defined benefit plan were next in order of employee importance, according to employers (79%, 77%, and 66%, respectively); with long term care coverage noted as the least likely to be perceived as important by employees (39% of employers).
The survey of 652 employers was published by the Transamerica Center for Retirement Studies and is based on a telephone survey conducted between Oct. 11 and Nov. 21, 2007. Of the 652 employers, 369 represented firms with 10-499 employees and 283 represented firms with 500 or more employees.
In 2007, more than half of the employers (55%) thought that potential employees would be interested in a higher-than-expected salary coupled with poor retirement benefits, as opposed to excellent retirement benefits coupled with only meeting the potential employee’s minimum salary requirements. However, a major difference of opinion exists between large and small employers: 57% of small employers versus 43% of large employers believe that potential employees would be interested in higher-than-expected salary/poor retirement benefits. Conversely, 51% of large employers versus 39% of small employers chose excellent retirement benefits/minimum salary requirements.
Of the 652 companies surveyed, 62% offered a 401(k) plan; 19% offered a company-funded defined benefit plan; 16% offered an employee-funded plan that was not a 401(k) plan (SIMPLE plan, simplified employee pension (SEP), etc.); 11% offered a separate retirement plan for select executives or senior management; and 21% offered none of the above-mentioned plans. (This totals more than 100% because some companies offer more than one plan.) Large employers are more likely than small employers to offer a 401(k) plan (82% versus 59%); a company-funded defined benefit plan (39% versus 17%); a SIMPLE, SEP, or other employee-funded plan that is not a 401(k) plan (19% versus 15%); and a separate retirement program for select executives or senior management (29% versus 9%).
Automatic enrollment in the company 401(k) plan now is being used by 31% of the large employers surveyed and 22% of the small employers. Of the 128 companies using automatic enrollment, 47% use a default contribution rate of 4% or less, 11% use a 5%-8% rate, none used 9%-12%, 2% used 13%-15%, 4% used a rate of 16% or higher, and 37% did not respond. An annual automatic contribution increase function is used by 34% of the large employers and 24% of the small employers that also use automatic enrollment.
Nearly half of the 128 companies (48%) have a default investment option that uses a diversified mix of stocks, bonds, and cash through funds such as a balanced fund, a target maturity fund, or a life cycle fund. A money market or stable value fund is used by 24% of the companies, and a broad index fund is used by 1% of the companies. A managed fund also is used by 1% of the companies, while 16% use some other type of investment option.
Employee response to automatic enrollment has been either positive or neutral at more than 80% of the companies. However, 69% of small employers versus 51% of large employers experienced positive employee response. Neutral employee response occurred mainly at large employers (42%) versus 12% at small employers. Negative employee reaction was found at 1% of large employers and 3% of small employers. No response to the question came from 6% of the large employers and 16% of the small employers.
Of the 377 employers, 27% of the large employers and 8% of the small employers said that they planned to adopt an automatic enrollment feature in the future. The reasons from the other employers for not adopting automatic enrollment in the future were varied: participation rate already is high (cited by 34% of these employers), want to allow employees to choose (15%), concerned about cost (10%), employees not interested (8%), and concerned about administrative complexity (6%).
Nearly one-fifth (19%) of employers that sponsor a 401(k) plan currently offer a Roth 401(k) option to their participants, and 10% of those 401(k) sponsors that do not offer a Roth 401(k) option plan to do so in the future. The primary reasons given for not planning to offer a Roth 401(k) in the future are a lack of employee interest (26%), cost concerns (13%), administrative complexity (11%), and lack of awareness of the Roth 401(k) option (10%).
A complete copy of the 160-page 9th Annual Transamerica Retirement Survey–Employers and the companion 83-page 9th Annual Transamerica Retirement Survey–Workforce can be found at http://www.transamericacenter.org/.
For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.
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