29% Chose Deferral Higher Than Default

Five percent of Section 401(k) plans include an automatic contribution arrangement (ACA), according to the Internal Revenue Service (IRS) 401(k) Compliance Questionnaire.

Large and very large plans are more likely than small or medium ones to have an automatic contribution arrangement.    

According to the IRS’s final report of responses from its Questionnaire, 43% of participants subject to an ACA deferred at the default rate, while 29% elected a rate higher than the default rate.Twenty-one percent elected not to make elective deferrals, and 7% elected a rate less than the default rate.  

The final report of responses from the IRS 401(k) Compliance Check Questionnaire includes results from the Interim Report. (See “IRS Issues Interim Report about 401(k) Compliance Questionnaire.”)That report projected 401(k) Questionnaire findings to the Section 401(k) plan sponsor population that files Form 5500.  

The final report also includes: 

  • Additional analysis of the 401(k) Questionnaire not included in the Interim Report; 
  • A new section about Automatic Contribution Arrangements;  
  • Stratified data highlighting differences in the results based on plan size; and 
  • Updates to the data included in the Interim Report to address questions from the retirement plan community. 

The final report is here.