While employers often provide matching contributions to their traditional 401(k) plan, they typically delay fully vesting their employees in those matching funds, according to XpertHR’s 2021 Employee Benefits Survey of 452 U.S. employers.
The survey covered over 10 types of retirement plans and found that traditional 401(k) plans are the most popular, with 60% of responding organizations offering this type of plan to all or most of their workforce, followed by Roth 401(k) plans at 43% (respondents could choose more than one type of plan.)
Among the 271 surveyed employers that offer a traditional 401(k) plan, 82% match at least some portion of employee contributions to the plan, compared with 18% that provide no matching funds. And, among the 222 responding companies that do provide matching funds, 28% fully vest their employees in these funds immediately, while most require a waiting period.
These waiting periods vary widely, and respondents noted several timeframes: up to one year (13%), up to two years (7%), up to three years (14%), up to four years (6%), up to five years (17%), up to six years (10%), and more than six years (1%). Five percent were not sure. It should be noted that the IRS requires matching funds to 401(k)s to be fully vested at least by six years of service.
“The survey shows that while employers often provide matching funds for their traditional 401(k) plans, most require wait times—sometimes up to several years—for employees to become fully vested in those employer contributions,” said Andrew Hellwege, Surveys Editor, XpertHR.
The survey also covered a variety of topics in the health care and insurance space, including whether employers fully insure or self-insure the health care plan(s) they offer to their workers, and found that smaller organizations are more likely to fully insure.
Eighty-two percent of organizations with fewer than 250 workers fully insure their health care insurance plan(s), compared with 45% of companies with 250 to 999 employees, and 21% of employers with a staff of 1,000 or more. Conversely, 11% of small organizations self-insure their plan(s), compared with 50% of mid-size companies, and 55% of large employers.
“The survey shows that workforce size is clearly a factor when organizations are determining whether to fully insure or self-insure their health care plans,” notes Hellwege, “as small companies are about four times more likely to fully insure than large employers.”
XpertHR’s Employee Benefits Survey 2021 was conducted from March 30, 2021, to April 23, 2021. The survey report covers employer trends concerning employee benefits, such as health care plans and insurance benefits, retirement plans, as well as a variety of other financial, physical, and mental wellness benefits.
This is the second year XpertHR has conducted this survey. The first survey was published in 2020.
SEE ALSO:
- Plan Sponsors Get Company Match Back on Track
- Benefits Survey Reveals Who Favors What Type of Retirement Plan
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
