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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: Fifty percent of defined contribution plans offer investment advice and/or managed accounts to their participants, according to a survey of 233 plan sponsors conducted by Mercer. Another 10% of respondents plan to offer either investment advice or managed accounts within the next year.
The survey found that 22% of the plans offer only investment advice, while 6% offer only managed accounts. Both investment advice and managed accounts are offered by 22% of the respondents. Plans with assets less than $250 million and those with assets exceeding $1 billion were most likely to offer investment advice (26% and 23%, respectively). Large plans were also more likely to offer participants both investment advice and managed accounts (35% of plans with $501 million to $1 billion and 28% of plans with more than $1 billion in assets).
Among the 44% of respondents who offer investment advice, 68% indicated that 10% or less of their participants actually enrolled in the investment advice program. Of the remaining 32% of respondents, 13% reported having participation rates of 11% to 15%, but only 6% of respondents had more than 50% of their participants enrolled in an investment advice program.
Actual participation in managed account programs was slightly lower than participation in investment advice programs: 71% of the respondents that offer managed account programs reported having 10% or less of those participants enrolled in the program, while 9% of the respondents indicated that they had 11% to 15% of their participants enrolled in a managed account program. Most of the plans offering managed accounts (78%) require the participants to pay all of the fees while 11% of plans pay all of the fees associated with the managed account with participants paying no fees.
The survey found that 80% of the plans offer an annuity purchase option to their plan participants upon retirement. Another 14% of permit participants to purchase deferred annuities during employment with a portion of their payroll deferral contribution. A small percentage of plans (6%) permit participants to allocate their assets to a balanced fund and at retirement, the investment manager sets a guaranteed payout (e.g., 5%) with an annuity taking over the payouts when the account is depleted.
The percentage of participant assets invested in target date options is relatively modest, Mercer noted. The survey found that 43% of the plans have between 10% and 25% of their assets invested in target date funds, while 38% of the plans have 10% or less of their assets invested in target date funds. Of the remaining plans, 7% of the plans have more than 50% of their assets invested in target date funds, while 13% of plans have between 26% and 50% of their assets invested in target date funds.
Of the 233 survey participants, 81% offered 401(k) plans, 13% sponsored 403(b) plans, and 6% sponsored other types of defined contribution plans. Forty-four percent of the plan sponsors said that their largest defined contribution plan had assets of less than $250 million while 26% of the plan sponsors reported that their largest defined contribution plan had assets exceeding $1 billion.
For more information, visit http://www.mercer.com/2011-us-dc-investment-survey.
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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