Small Employers Lead Growth in 401(k)s

Weathering downturns on stock markets, reductions in participation and declines in deferral rates, employers continued establishing new 401(k) retirement plans in 2002, when the industry posted a 4% increased in total plans, according to the National Defined Contribution Council (NDCC) and the Spectrem Group.
The growth in 401(k) plan sponsorship is concentrated primarily among employers with 100 or fewer workers, the NDCC reports. The trend represents a bright spot in the defined contribution market, which has seen a drop in contributions and a participation decline from 80% in 1999 to 70% in 2002. 401(k) plans hold 71% of the nearly $3 trillion in defined contribution plan assets.
"The three-year bear market and the recession have made Americans leery of saving as much of their income in their retirement plans," observed Charles Vieth, president of NDCC. "The good news is that despite the market decline, employers continue to promote a strong savings ethic made easier through employer-sponsored plans."