A recent report from the U.S. Government Accountability Office found that while 81,000 new employer-sponsored retirement plans were formed during the 3-year period between 2009 and 2011, the overall trend was negative due to plan terminations — even with increased tax incentives. In addition, new plan formation during that period was below 2003-2007 levels. But the news was not all bad: The number of participants grew.
Highlights of the report include:
- 34,000 plans were terminated, due in part to bankruptcy and consolidation
- 90 percent of new plans were at companies with fewer than 100 participants
- The number of plans dropped by 52,000 from 2000 to 2011
- 26 percent of small-plan growth was fueled in part by doctors, dentists, attorneys and other professional service groups
- 5 percent of participants were affected by statutory limits
It’s likely that the number of participants grew while the number of plans decreased because of higher participation rates resulting from auto-enrollment. But coverage remains an issue — which is fueling the auto-IRA movement in 16 states and counting.
The numbers the report includes refer to sections of the Internal Revenue Code. The elective deferral and catch-up contribution limits apply to employees who participate in 401(k), 403(b), most 457 plans, and the Thrift Savings Plan for federal employees.
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John Iekel is Senior Writer and Editor for the ASPPA Net and NTSA Net portals.
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