Recently, Hewitt Associates released a highlights summary from its Spring 2007 biennial survey. Twenty-nine percent of Fortune 500 companies participated in the survey which measured and analyzed, among other criteria, basic plan design and participation, automatic enrollment features, employer and employee contributions, investment options and plan expenses.
The survey found that 65% of employers reported that a 401(k) plan was the primary retirement vehicle for their employees. The survey also found that (a) almost one-half (49%) of employers offer immediate employee participation, (b) automatic contribution escalation, where employee contributions increase each year with no additional action by the employee, increased from 9% of employers in 2007 to 35% in 2007, and (c) almost all employers (98%) contribute money to the plan. The most common employer matching contribution, according to the survey, is $0.50 per $1.00 up to a specified percentage (most commonly 6%) of pay. Further, the survey noted that based on recent scrutiny by the government, media, and the threat of litigation, 61% of employers noted that they are somewhat concerned about plan expenses.
According to Frank J. Del Barto, because many of the recent lawsuits filed against 401(k) plans and their sponsors allege that the fees paid by plan participants are excessive, plan sponsors should periodically review plan expenses. He reminds plan fiduciaries that ERISA section 404 (Fiduciary Duties) requires plan fiduciaries to discharge their duties with respect to a plan solely in the interest of plan participants and beneficiaries and for the exclusive purposes of providing benefits to participants and their beneficiaries and defraying reasonable expenses in administering the plan.