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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.

Learn more:

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: 02-Apr-2014