IRS Logo
Print - Click this link to Print this page

401(k) Compliance Check Questionnaire Final Report

The Final Report (pdf – 91 pages) summarizes the results from the 401(k) Compliance Check Questionnaire. The results are both:

  • generalized to the 401(k) plan population that files Form 5500, and
  • stratified to highlight the differences in the results by plan size.

The 401(k) Questionnaire requested information in the following areas: demographics, plan participation, contributions, designated Roth features, distributions, top-heavy and nondiscrimination testing, IRS correction programs and plan administration.

The following chart contains highlights of the findings from the Questionnaire. Unless otherwise indicated, all findings are for the 2008 plan year.

 Highlights of Findings

 Response

 % of Plans, Plan Sponsors, or Participants

 Plan Type

Plans that are a safe harbor 401(k) 43%
Plans that use a pre-approved plan document 86%
Plan sponsors that maintain a defined benefit plan 6%
Plan sponsors that terminated a defined benefit plan between 1995 and 2010   7%

 Employee Contributions

Plans where participants may change deferral elections at any time 41%
Plans where participants may change deferral elections only once a year 2%
Plans where catch-up contributions allowed 96%
Plans where designated Roth contributions allowed 22%
Plans where after-tax contributions other than designated Roth allowed 4%
Plans where there was an increase in per-participant dollars from 2006-2008 58%
Plans where there was a decrease in per-participant percentages of compensation deferred from 2006-2008 52%
Plans that did not need to make corrective distributions of contributions in excess of 402(g) limit for 2006-2008 94%
Plans that included an automatic contribution arrangement 5%
Participants in an ACA who deferred at default rate 43%
Participants in an ACA who opted out 21%
Participants in an ACA who deferred at rate lower than default rate 7%
Plans with an ACA that satisfied the qualified automatic contribution arrangement requirements <25%
Plans with an ACA that satisfied the eligible automatic contribution arrangement requirements <50%
Plan with an ACA that satisfied the both the QACA and EACA requirements <20%

 Employer Contributions

Plans that provide matching contributions 68%
Of plans that provide matching contribution, the percentage that require one year of service to be eligible 58%
Plans that provide nonelective contributions such as profit-sharing 65%
Plans that suspended or discontinued matching in 2006 1%
Plans that suspended or discontinued matching in 2008 4%
Plans that suspended or discontinued nonelective contributions in 2006 2%
Plans that suspended or discontinued nonelective contributions in 2008 5%
Plans that reduced nonelective contributions in 2006 1%
Plans that reduced nonelective contributions in 2008 5%

 Participation in Elective Deferral Contributions

Plans with no service requirement   13%
Plans with one-year service requirement     54%
Plans with age 21 restriction  64%

 Top-Heavy

Plans that were top-heavy 20%
Of plans that were top-heavy, the percentage that resolve top-heavy issues by making minimum contributions to non-key employees 79%

Nondiscrimination Testing

Of plan sponsors subject to the ADP test, the percentage that corrected excess contributions within 2 ½ months following the end of the year of the excess 68%
Of plan sponsors subject to ACP test, the percentage that corrected failures by distributing excess aggregate contributions 90%
Of plan sponsors subject to the ADP test, the percentage that used current year method 60%
Of plan sponsors subject to the ADP test, the percentage that used prior year method 31%

Distributions

Plans that allow in-service withdrawals other than for hardship 62%
Plans that permit hardship distributions 76%
Plans that permit direct rollover distributions  79%
Plans that provide lump sum form of benefit 99%
Plans that permit participant loans 65%
Plans with an increase in the number of outstanding participant loans from 2006 to 2008 47%
Plans with an increase in defaulted loans from 2006 to 2008 60%
Plans that provide involuntary cash-outs 72%

Investments 

Plans that have investments in employer securities  1%
Plans that have assets held in foreign investments 1%

Plan Administration

Plans that use a third-party administrator for plan administration 53%
Plans sponsors that rely on third-party administrators for making timely plan amendments  73%
Plans where third-party administrators are responsible for preparation of Form 5500 83%

Determination Letters

Plan sponsors that have requested a determination letter from the IRS 23%

EPCRS 

Plan sponsors that are aware of EPCRS   65%
Of plan sponsors that have used EPCRS, the percentage that found it helpful  75%


Note: A 95% confidence level was used for all analysis. The margin of error for each key finding is in the Report and a more detailed discussion of margin of error is presented on pages 14 and 15 in the Final Report.

Page Last Reviewed or Updated: 10-Nov-2014