Great News About 401k Plans to Close Out 2016

Great news to start 2017.

Great news to start 2017.

Good news all around for 401k plans. No less authorities than BrightScope and the Investment Company Institute teamed to release a report that finds, among other things, the great majority of employers that offer a 401k plan — more than three-quarters—make matching contributions. The report also reveals that plans offer a wide variety of investment choices and that mutual fund fees in 401(k) plans have trended down.

The study, “The BrightScope/ICI Defined Contribution Plan Profile: A Close Look at 401k Plans, 2014,” analyzes the most recent detailed data available from the Department of Labor on private-sector 401k plans.

Key Facts on Employer Contributions Based on the Study:

Employers Design 401k Plans to Include Features That Employees Value

Mutual Fund Fees, Total Plan Costs Continue Trending Down

Based on the data from the BrightScope database, the study found that mutual fund fees in 401k plans trended downward between 2009 and 2014.

The study also found that fund expenses are typically lower in larger plans. For instance, the average asset-weighted expense ratio for domestic equity mutual funds was 0.82 percent for 401k plans with $1 million to $10 million in plan assets, compared with 0.39 percent for 401k plans holding more than $1 billion in plan assets.

“Fees in 401k plans continue to trend downward over time,” said Brooks Herman, head of data and research at BrightScope, a unit of Strategic Insight. “Increased transparency in the form of public disclosure have allowed plan participants and plan sponsors to judge the impact of fees on 401k savings.”

Key Findings on Investment Choices Offered Through 401k Plans:

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