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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.
The Profit Sharing/401k Council of America's 54th Annual Survey of Profit Sharing and 401(k) Plans indicates that most of the plans that have adopted automatic enrollment restrict the feature to new hires and continue to use a default deferral rate of 3%.
In a related finding, the survey reports that over 60% of the plans now offer target date funds as an investment option. The PSCA survey reflects the 2010 plan experience of 820 companies with 10.5 million participants and $691 billion in plan assets.
Asset allocation
The average plan has approximately 63 percent of assets invested in equities. Plan assets are most frequently invested in actively managed domestic equity funds (25.1% of assets), target-date funds (13%), stable value funds (9.9%), indexed domestic equity funds (8.8%) and actively managed international equity funds (8.4%).
Automatic enrollment
Less than one-half (41.8%) of the surveyed plans have adopted an automatic enrollment feature. Of those plans that have an automatic enrollment feature, the overwhelming majority (82.3%) restrict the feature to new hires, while 17.7% extend it to all non-participants. The most common default deferral is 3% of pay, and the most common default investment option is a target-date fund.
Target-date funds
Related to the expansion of automatic enrollment, 63.6% of plans now offer a target-date fund as an investment option. Significantly, the average allocation of plan assets to such funds increased 30% from 2009 to 13%.
Hardship distributions
Hardship withdrawals are permitted in 89% of 401(k) plans, 85.8% of combination plans, and 4.5% of profit-sharing plans. Slightly under 2% of participants took a hardship withdrawal in 2010.
Investment options
Plans offer an average of 18 funds for both participant and company contributions. The funds most commonly offered to participants are actively managed domestic equity funds, actively managed international equity funds, indexed domestic equity funds, and actively managed domestic bond funds.
Investment advice
According to the survey, a majority (67.9%) of companies retain an independent investment advisor to assist with fiduciary responsibility. Investment advice is offered by 57.6% of respondent companies. However, less than one quarter (22.3%) of participants used the advice when it was offered.
Source: PSCA news release, October 11, 2011.
For more information, visit http://www.wolterskluwerlb.com/rbcs.
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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