The Status of Company Matches
In the past year, there has been a slight decrease in the percentage of companies providing a match in their defined contribution (DC) plan, the 2017 PLANSPONSOR Defined Contribution Survey indicates. Among all plan sizes, 73.7% offer a match, down from 74.7% the year before. There is a spread of 17 points between micro and mega plans when it comes to matches: 67.9% of micro plans offer them and 85.0% of mega plans do so.
In relation to a participant’s first 6% of salary deferred, the most common company match is between 51% and 99%, cited by 33.8% of plan sponsors. Next is a 50% match, cited by 22.1% of sponsors, and then less than a 50% match, cited by 17.5% of sponsors. While only 7.9% of plan sponsors offer a match greater than 100% of a participant’s first 6% deferred, this rises slightly as plan size does, ultimately reaching 11.4% with mega plans.
Matches are most commonly made on a per-pay-period basis—by 70.7% of sponsors. The next greatest frequency is annually, the practice of 14.4% of sponsors.
Vesting Schedules
As to when a participant is 100% vested, 37.0% of plan sponsors permit this immediately after the employee enrolls. This is followed by 19.3% that require a five-year wait; 16.8%, a six-year wait; 12.8%, a three-year wait; and 4.7%, a two-year wait.
In an online survey conducted by Nationwide last fall, 50% of 1,069 business owners with less than 300 employees said they plan to increase their 401(k) match, with 55% of this group attributing the change to rising revenue.
It will be interesting to see, in next year’s PLANSPONSOR Defined Contribution Plan Benchmarking Report, whether that increase has come to pass.
Does your organization offer a matching contribution to participant accounts?
| All Industries | ||||||
|---|---|---|---|---|---|---|
| Overall | Micro | Small | Midsize | Large | Mega | |
| Yes | 73.7% | 67.9% | 74.9% | 76.8% | 78.1% | 85.0% |
| No | 25.6% | 30.3% | 24.9% | 23.2% | 21.6% | 15.0% |
| Unsure | 0.7% | 1.8% | 0.2% | 0.0% | 0.3% | 0.0% |
If you have an employer match, please select the option below that most closely relates to your match formula.
| All Industries | ||||||
|---|---|---|---|---|---|---|
| Overall | Micro | Small | Midsize | Large | Mega | |
| >100% of first 6% of salary | 7.9% | 6.9% | 7.8% | 8.2% | 7.8% | 11.4% |
| 100% of first 6% of salary | 12.1% | 12.8% | 10.8% | 8.9% | 14.7% | 16.8% |
| >51% – 99% of first 6% of salary | 33.8% | 34.1% | 30.1% | 34.1% | 37.1% | 44.1% |
| 50% of first 6% of salary | 22.1% | 20.6% | 22.8% | 27.2% | 22.4% | 15.8% |
| <50% of first 6% of salary | 17.5% | 18.6% | 21.2% | 16.4% | 13.5% | 5.0% |
| Other | 6.6% | 7.1% | 7.3% | 5.2% | 4.5% | 6.9% |
How frequently are matching contributions made to plan participants?
| All Industries | ||||||
|---|---|---|---|---|---|---|
| Overall | Micro | Small | Midsize | Large | Mega | |
| Non-pay-period: Annually | 14.4% | 15.9% | 15.2% | 13.9% | 12.6% | 7.8% |
| Non-pay-period: Quarterly | 3.1% | 2.3% | 2.8% | 5.8% | 2.8% | 3.4% |
| Non-pay-period: Monthly | 2.7% | 3.6% | 2.9% | 1.0% | 2.8% | 1.0% |
| Non-pay-period: Twice monthly* | 2.8% | 3.9% | 2.2% | 2.6% | 2.0% | 2.0% |
| Non-pay-period: Biweekly† | 4.9% | 4.6% | 5.1% | 3.6% | 6.9% | 5.4% |
| Per pay period | 70.7% | 67.6% | 71.1% | 71.5% | 71.3% | 79.9% |
| Other | 1.4% | 2.2% | 0.9% | 1.6% | 1.6% | 0.5% |
Source: 2018 PLANSPONSOR Defined Contribution Plan Benchmarking Report