Two-thirds of 401(k) plans match employees' contributions: IRS
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Most employers with 401(k) plans match employees' salary deferrals, and the largest employers are most likely to do so, according to an Internal Revenue Service survey.
In all, 68% of 401(k) plans match employees' contributions.
That rises to 81% of plans with 101 to 2,500 participants, and 90% of plans with more than 2,500 participants.
By contrast, only 59% of plans with five or fewer participants offered a 401(k) match as did 68% of plans with between six and 100 participants.
The likelihood that employers cash out, or require employees to take their 401(k) account balance when terminating employment, also varies by plan size. Under the law, such involuntary distributions are allowed for account balances that are $5,000 or less.
For example, 87% of plans with more than 2,500 participants have an involuntary cash-out feature, as do 83% of plans with 101 to 2,500 participants. Only 59% of plans with five or fewer participants have such a feature, while 73% of plans with six to 100 participants have an involuntary cash out feature.
Among plans with an involuntary cash-out feature, 58% cashed out terminating participants when their account balances were $1,000 or less, while 38% of plans set $5,000 as their account balance threshold for involuntary cash-outs.
The survey, released Monday, is based on information filed with the IRS by just over 1,000 employers.
The IRS noted that 401(k) plans have become the “most prevalent form of retirement plan in the United States,” adding that employers now sponsor more than half a million 401(k) plans, with the plans covering about 60 million people.
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