RESEARCH | February 22, 2013

2013
Micro Plan Survey

As small businesses are the main employer of Americans, so
are micro plans—those holding less than $5 million in assets—the most common
retirement plan size.

Reported by PLANADVISER

Micro Industry Data

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Micro Industry Data

Types of DC plans offered
	ALL PLANS	<$1MM	$1MM-$5MM
401(k)	86.4%	90.9%	90.1%
401(a)	5.0%	0.9%	1.5%
403(b)	12.0%	6.9%	8.7%
457	9.2%	2.0%	4.0%
Money purchase	2.2%	1.0%	0.8%
Profit sharing	17.2%	11.4%	16.7%
ESOP	3.8%	0.0%	1.9%
Nonqualified deferred comp	12.1%	0.9%	1.8%
SEP/SIMPLE IRA	0.4%	0.7%	0.3%
Other	2.5%	1.4%	1.7%

Plan design elements
	ALL PLANS	<$1MM	$1MM-$5MM
Auto-enrollment	41.7%	26.2%	29.0%
Auto-deferral increases	28.6%	20.4%	15.5%
Written IPS	28.6%	20.4%	15.5%
Loan provision	82.5%	78.7%	77.2%
Hardship withdrawal provision	90.7%	92.6%	89.1%
Safe harbor provision	49.4%	64.1%	53.0%
Roth 401(k) contribution	48.0%	49.2%	46.8%
Use a financial adviser	66.4%	63.5%	68.1%
Offer financial advice	74.9%	70.6%	79.1%
Catch-up contributions	97.1%	97.2%	97.9%
ERISA accounts	44.2%	53.9%	42.3%

Plan participation rate
	ALL PLANS	<$1MM	$1MM-$5MM
Average	72.6%	60.6%	71.2%
Median	80.0%	60.0%	77.0%

Plan participation eligibility
	ALL PLANS	<$1MM	$1MM-$5MM
Immediately upon hire	35.9%	17.0%	19.3%
Within 3 months	26.5%	21.2%	23.9%
After 3 to 6 months	8.1%	9.2%	10.4%
After more than 6 months	29.6%	52.6%	46.4%

Approximate maximum match
	ALL PLANS	<$1MM	$1MM-$5MM
>100% of 6% of salary	5.4%	5.3%	5.3%
100% match of 6%	15.4%	15.7%	14.0%
51% to 99% of 6%	19.2%	12.6%	16.0%
50% match of 6%	28.1%	24.7%	27.6%
<50% of 6%	23.5%	27.6%	28.3%
Fixed-dollar contribution	8.4%	14.0%	8.8%

Participants maximizing match
	ALL PLANS	<$1MM	$1MM-$5MM
Average	67.0%	69.4%	68.7%
Median	75.0%	80.0%	77.0%

Types of employer contributions made to participant accounts
	ALL PLANS	<$1MM	$1MM-$5MM
Match on participant contribution	75.0%	61.5%	69.3%
Nonelective contribution	8.2%	3.8%	3.6%
Profit-sharing contribution	26.4%	16.9%	24.1%
Other contribution	11.7%	8.1%	9.9%
No employer contribution	9.1%	16.9%	10.9%

When participants are 100% vested
	ALL PLANS	<$1MM	$1MM-$5MM
Immediately on enrollment	31.8%	33.4%	25.9%
6 months	1.0%	1.5%	1.1%
1 year	5.2%	10.2%	4.9%
2 years	3.9%	1.7%	2.2%
3 years	13.6%	10.4%	9.5%
4 years	3.4%	2.4%	3.9%
5 years	23.4%	21.5%	28.1%
After >5 years	17.6%	18.9%	24.4%

Participants with outstanding loans
	ALL PLANS	<$1MM	$1MM-$5MM
Average	14.2%	9.6%	11.8%
Median	11.0%	2.0%	9.0%

Participants making hardship withdrawals
	ALL PLANS	<$1MM	$1MM-$5MM
Average	2.0%	2.8%	1.5%
Median	1.0%	0.0%	0.0%

Number of investment options offered and held
	ALL PLANS	<$1MM	$1MM-$5MM
Options offered–average	17.6	16.3	18.3
Options offered–median	16.0	15.0	17.0
Options held–average	4.7	4.8	5.0
Options held–median	4.0	4.0	5.0

Types of investment options offered
	ALL PLANS	<$1MM	$1MM-$5MM
Target-date/Lifecycle fund	76.3%	59.3%	66.5%
Risk-based lifestyle fund	29.8%	29.2%	34.3%
Index fund	77.4%	58.0%	65.7%
Money market fund	74.7%	80.3%	77.5%
Employer stock	8.8%	0.3%	0.7%
Stable value fund	69.1%	37.6%	52.5%
“In-plan” guaranteed income option	9.5%	7.5%	8.7%
Out-of-plan guaranteed income option	1.0%	0.3%	0.7%
Self-directed brokerage	19.8%	6.4%	9.4%
Mutual fund window	8.8%	10.2%	9.9%
Real estate/REITs	22.6%	15.3%	21.6%
Alternative investments	2.8%	4.4%	2.3%
ETFs	0.9%	1.7%	1.3%

Approximate average expense ratio of plan investments
	ALL PLANS	<$1MM	$1MM-$5MM
<0.25% (<25 bps)	7.7%	10.2%	5.1%
0.25 to 0.50% (25 to 50 bps)	18.1%	8.6%	13.9%
0.51 to 0.75% (51 to 75 bps)	19.4%	6.7%	11.2%
0.76% to 1.0% (76 to 100 bps)	17.8%	10.7%	17.2%
1.0% to 1.5% (101 to 150 bps)	9.4%	9.7%	14.5%
>1.5% (>150 bps)	1.3%	3.8%	2.3%
Do not know	26.3%	50.4%	35.7%

Investment vehicles used in DC plan
	ALL PLANS	<$1MM	$1MM-$5MM
Mutual funds	96.7%	83.7%	89.7%
Separate accounts	24.0%	19.4%	20.3%
Managed accounts	32.9%	33.1%	34.8%
Commingled pools	7.7%	3.9%	4.4%
Collective trusts	13.2%	4.5%	3.8%

Frequency of formal review of investment options
	ALL PLANS	<$1MM	$1MM-$5MM
Quarterly	39.0%	9.2%	18.4%
Twice a year	19.1%	9.7%	17.8%
Annually	29.1%	44.6%	44.0%
Every 1 to 2 years	3.2%	6.4%	5.3%
Every 2-plus to 3 years	1.9%	6.2%	3.2%
Every 3-plus years	1.8%	4.5%	3.1%
Never	4.0%	16.3%	5.7%
Other	1.8%	2.7%	2.2%

Investment committee for the DC plan
	ALL PLANS	<$1MM	$1MM-$5MM
Employees only	52.6%	20.0%	36.1%
Nonemployees only	1.4%	2.5%	1.5%
Employees and nonemployees	21.3%	6.7%	19.3%
Have committee—unsure of makeup	0.8%	0.2%	0.7%
No investment committee	22.3%	67.8%	39.9%
Do not know	1.5%	2.7%	2.5%

Sponsor services ratings
(1 to 7 scale, 7=extremely satisfied)	ALL PLANS	<$1MM	$1MM-$5MM
Sponsor website/tools	6.09	6.31	6.21
Plan reports/benchmarking	5.96	6.20	6.1
Form 5500 processing	6.29	6.43	6.38
Compliance support/testing	6.29	6.46	6.39
Legislative/Regulatory updates	6.15	6.27	6.21
Account team knowledge	6.44	6.54	6.51
Service responsiveness	6.42	6.54	6.49
Staff consistency/Lack of turnover	6.34	6.46	6.40
Plan design flexibility	6.30	6.41	6.38
Fee "cost-to-value"	6.06	6.05	6.04

Participant services ratings
(1 to 7 scale, 7=extremely satisfied)	ALL PLANS	<$1MM	$1MM-$5MM
Participant call center	6.23	6.50	6.35
Website functionality	6.20	6.33	6.28
Online tools/services	6.18	6.29	6.24
Participant statements	6.36	6.52	6.44
Education program	5.89	6.10	5.85
Communication materials	6.01	6.21	6.03
Enrollment assistance	6.16	6.34	6.20
Retiree services/payments	6.28	6.26	6.80
Onsite meetings	5.93	5.95	5.81
Range of investments	6.40	6.31	6.43
Loan/Withdrawal processing	6.41	6.50	6.47
Beneficiary administration	6.24	6.39	6.34
Participant fee disclosure	6.21	6.20	6.23

Length of relationship with provider
	ALL PLANS	<$1MM	$1MM-$5MM
<1 year	4.0%	4.5%	3.9%
1 to <3 years	12.5%	17.2%	14.9%
3 to <5 years	16.1%	26.7%	17.4%
5 to <7 years	14.8%	17.4%	15.1%
>7 years	50.9%	31.8%	46.3%
Do not know	1.7%	2.4%	2.4%

Frequency of formal review of providers
	ALL PLANS	<$1MM	$1MM-$5MM
Annually	29.6%	39.5%	37.2%
Every 1 to <2 years	12.1%	15.5%	15.2%
Every 2 to <3 years	16.0%	13.3%	16.0%
Every 3 to <5 years	21.1%	6.8%	13.0%
Every 5-plus years	12.2%	5.6%	6.9%
Never	9.1%	19.2%	11.7%

Frequency of formal review of administrative costs/fees
	ALL PLANS	<$1MM	$1MM-$5MM
Annually	71.8%	62.6%	66.8%
Every 1 to <2 years	9.5%	11.4%	10.9%
Every 2 to <3 years	7.1%	7.0%	8.0%
Every 3 to <5 years	4.3%	2.6%	3.6%
Every 5-plus years	2.0%	2.6%	2.4%
Never	5.3%	13.8%	8.3%

*Revenue sharing, wrap fees, fixed fees, etc.

Who pays the plan’s admin/recordkeeping costs
	ALL PLANS	<$1MM	$1MM-$5MM
Participants*	24.2%	10.8%	19.2%
Shared—participants/sponsor	21.6%	16.1%	20.5%
Plan sponsor pays all fees	41.7%	62.0%	46.2%
Other	3.1%	1.1%	2.3%
Do not know	9.4%	10.0%	11.8%