PLANSPONSOR - October/November 2019 - 34

2019 DC Survey: Plan Benchmarking
by automatic enrollment provisions that
might have them saving less than if they
had affirmatively elected to participate.
Instead of automatically enrolling
participants at 3%, defaulting them at
6% to 12% is the emerging industry best
practice. With most 65-year-olds today
projected to live past 85, many Americans
are underestimating their life expectancy
and thus their need for retirement savings.
However, that higher default rate is not yet
the majority position in practice. Among
those who responded to our survey, only
48% use a default rate higher than 3%.
Another concern attracting attention
is leakage from the retirement plan-the
withdrawal of assets from tax-advantaged
status. The Bipartisan Budget Act of 2018
has simplified the taking of hardship
withdrawals from a DC plan and, since
the bill's passage, such withdrawals have
spiked. This is only adding to the plan
leakage problem.
According to Kevin Barry, president
of workplace investing at Fidelity
Investments Inc., the number of such
withdrawals taken in the first half of
this year jumped 40% over those taken
last year. At the same time, the rate of
participants taking loans fell 7%. " This
is a trend we were afraid we would see
when the law was passed, " he says. " This
is a big issue. "
Reductions in maximum loan
amounts and number of loans, as well as
the imposition of fees and higher interest
rates on loans, can be written into loan
policy statements to discourage further
leakage. Sponsors can consider amending
their loan policy to let participants keep
paying back their loans after separating
from the company. -Judy Faust Hartnett
Methodology
The data that follow summarize adoption of select defined contribution
(DC) plan features, policies and practices and is based
on the 2019 PLANSPONSOR Defined Contribution Survey, an
online survey of plan sponsors that was conducted this August
through October. The survey gathered over 2,500 responses
from DC plans of all sizes, though small 401(k) plans make up
the greatest proportion of the sample and market. Findings are
meant to supplement existing plan governance processes; the
insights summarized here do not represent advice related to any
particular aspect of plan design. Please discuss results with a
trusted retirement plan expert before taking any action. Further
data is available and can be segmented by plan size, industry,
geography, etc. Email surveys@issmediasolutions.com for more
information and pricing on related data or reports.
Plan Demographics
Retirement Plan Offerings
89%
18%
10%
401(k)
403(b)
10%
457
Profit sharing
Percentage of Responses, by Asset Range
40%
30%
13%
<$5mm
Safe Harbor Plans
67%
54%
54%
43%
42%
$5mm - $50mm
>$50mm - $200mm
17%
>$200mm
10% 6%
Nonqualified
Any other
All plan sizes
<$5mm
$5mm - $50mm
>$50mm - $200mm
>$200mm
34 PLANSPONSOR.com October - November 2019

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PLANSPONSOR - October/November 2019

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