The Most Common 401(k) Features

The typical plan offers 18 fund choices and a 50 percent match.


Every company's 401(k) plan is slightly different. Some businesses offer more lucrative company matches and more diverse investment choices than others. A national survey released today examines what the typical 401(k) looks like. Here are a few of the highlights.

Company Contributions. Employer deposits into 401(k) plans averaged 3.2 percent of pay, according to a survey of 1,011 plans with 7.4 million participants and more than $730 billion in plan assets by the Profit Sharing/401k Council of America. The study represents 401(k)'s in 2007. The most common 401(k) recipe is a fixed match, which is present in 24.8 percent of plans. Among those with fixed matches, the most popular formulas are 50 cents per dollar up to the first 6 percent of pay (26 percent of plans), one dollar for every dollar up to the first 4 percent of pay (10 percent), and dollar for dollar up to the first 3 percent of pay (8 percent).

Other companies have more complicated formulas, like matching dollar for dollar the first 3 percent of salary contributed and then 50 cents on the dollar for the next 2 percent. And some outfits offer no match at all, or match as little as 25 cents for each buck contributed.

Asset Allocation. 401(k) plans offer an average of 18 fund choices, often including actively managed domestic equity funds (77 percent of plans), actively managed international equity funds (73 percent), indexed domestic equity funds (70 percent), and actively managed domestic bond funds (64 percent).

The typical plan has approximately 65 percent of assets invested in equities. Top investments are actively managed domestic equity funds (29 percent of assets), indexed domestic equity funds (10 percent), stable-value funds (9 percent), and balanced stock/bond funds (8 percent).

Employee Participation. Most eligible employees (82 percent) have some kind of balance in their 401(k) plan. Pretax participant deferrals average 5.6 percent of pay for non-highly compensated workers and 7 percent for highly paid workers.

Catch-up. Nearly every 401(k) plan (99 percent) allows catch-up contributions for participants age 50 and over, but only 34 percent of companies offer a match. About 12 percent of employees at large companies made catch-up contributions, while 43 percent of eligible participants at small companies did.

Other common features. More than half of large plans automatically enroll participants in their 401(k), 44 percent offer immediate vesting for matching contributions, and 30 percent of plans now offer a Roth 401(k) option (but only 13 percent of eligible employees participate).

Tell us, what features do you value in your 401(k) plan?