More Employers Embracing Auto Enroll: Profit Sharing Council

In its annual survey of 1,000 401(k) and profit-sharing plans, the Profit Sharing/401(k) Council of America found that 41% of plans had automatic enrollment during the 2006 plan year.

Employer contributions averaged 3% in 401(k) plans and 9.2% in profit-sharing plans. The most common formula employers use is a fixed match, with 29% doing this. Of them, 32% matched 50 cents per dollar up to the first 6% of employee contributions, 9% matched dollar for dollar up to 4% of contributions, and 8.5% matched dollar for dollar up to 3% of contributions.

Contribution rates among not highly compensated employees averaged 5.4% and 6.9% among those earning high salaries. Over 77% of employees had balances in their 401(k) plans.

Plans offered participants an average of 19 fund choices, and 78% offered actively managed domestic equity funds, 75% offered actively managed international equity funds, 71% offered indexed domestic equity funds and 64% offered balanced stock/bond funds.

Participants had an average of 70% of their assets in equities, the most popular (30%) being actively managed domestic equity funds. Another 10.3% of assets were in indexed domestic equity funds, 8.2% in balanced funds, and 8.9% in stable value funds.

More than 39% of plans offered immediate vesting for matching contributions. Ninety-eight percent of plans permitted catch-up contributions for those age 50 or older, 18.4% offered a Roth 401(k) and 13.6% had self-directed brokerage windows.