A recent report by 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:
- DC plans accounted for 75,000 of the 81,000 new plans formed from 2009-2011
- 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.
John Iekel is Senior Writer and Editor for the NTSA Net and ASPPA Net portals.
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