It’s official; just after Valentine’s day, Americans heart 401(k)s. Now if we could only get more employees to offer them, and more employees to invest.
The Investment Company Institute finds almost three-quarters of American households like 401(k) plans. The latest installment of ICI’s “American Views on Defined Contribution Plan Saving” finds 72 percent of U.S. households had favorable impressions of 401(k) and similar retirement plans in the fall of 2015, similar to 71 percent in fall 2014 and up from 66 percent in fall 2013.
“Survey responses indicated that households value the discipline and investment opportunity that 401(k) plans represent and that households were largely opposed to changing the tax preferences or investment control in those accounts,” the report stated. “A majority of households also affirmed a preference for control over the disposition of their retirement accounts and opposed proposals to require retirement accounts to be converted into a fair contract promising them income for life from either the government or an insurance company.”
ICI added that a vast majority of households disagreed with the proposal to require workers to participate in a new government-sponsored pension plan.
About nine out of 10 households with 401(k) and similar accounts agreed that these plans helped them think about the long term and made it easier to save. Close to half of 401(k)-owning households indicated they probably would not be saving for retirement if not for their plans. In addition, saving paycheck-by-paycheck made two-thirds of 401(k)-owning households surveyed less worried about the stock market.
About eight in 10 DC-owning households said the tax treatment of their retirement plans was a big incentive to contribute.
Nearly all households with DC accounts agreed that it was important to have choice in, and control of, the investments in their DC plans. Eighty-four percent indicated that their DC plan offered a good lineup of investment options.
As for proposed changes to 401(k)s, a strong majority of U.S. households disagreed with proposals to remove or reduce tax incentives for retirement savings.
Support for 401(k) account tax treatment also was widespread even among households not owning accounts or individual retirement accounts (IRAs). In fall 2015, 81 percent of households without DC accounts or IRAs rejected the idea of taking away the tax treatment of DC accounts.