2014
Micro Plan Survey

Micro plans have unique plan design characteristics—and
challenges<br />2013 PLANADVISER Micro Plan Survey

Micro Industry Data

Micro Industry Data

Type(s) of DC Plan(s) Offered
ALL MICRO<$1MM$1MM–$5MM
401(k)91.5%89.4%92.3%
403(b)6.3%6.8%6.2%
4573.3%3.0%3.4%
Money purchase1.0%0.6%1.1%
Profit sharing18.1%12.6%20.3%
ESOP*/KSOPˆ1.7%0.4%2.2%
Nonqualified deferred comp (NQDC)1.1%0.4%1.4%
SEP˜/SIMPLE• IRAº1.1%2.6%0.6%
Other2.3%2.2%2.3%
Footnote: *Employee stock ownership plan; ˆA combined ESOP and 401(k) plan˜Simplified employee pension; • Savings incentive match plan for employees; º Individual retirement account
Adviser Use Among Plans
ALL MICRO<$1MM$1MM–$5MM
Yes61.1%58.0%62.3%
No38.9%42.0%37.7%
Adviser Fiduciary Status
ALL MICRO<$1MM$1MM–$5MM
3(21) and 3(38) fiduciary8.9%7.3%9.5%
3(21) fiduciary only9.7%7.3%10.6%
3(38) fiduciary only4.3%4.6%4.1%
None34.3%29.4%36.1%
Don’t know42.8%51.5%39.6%
Common Adviser Services
ALL MICRO<$1MM$1MM–$5MM
Plan investment selection guidance88.6%86.5%89.4%
Plan education74.6%65.9%77.7%
IPS** review and monitoring34.8%29.8%36.6%
Review of fund performance77.7%68.3%81.1%
Present to investment committee 50.3%31.7%56.9%
Participant inv selection guidance68.2%64.7%69.5%
Participant education66.9%59.1%69.6%
Other3.3%3.6%3.2%
Footnote: **Investment policy statement
Plan Design Elements
ALL MICRO<$1MM$1MM–$5MM
Auto-enrollment23.4%21.4%24.2%
Auto-deferral increases12.1%10.6%12.7%
Written IPS
Loan provision74.5%71.9%75.5%
Hardship withdrawal provision85.6%81.8%87.1%
Safe harbor provision58.0%62.8%56.2%
Roth 401(k) contribution50.9%46.6%52.5%
Offer financial advice76.5%71.6%78.4%
Auto-Enrollment Default Investment
ALL MICRO<$1MM$1MM–$5MM
Target-date fund (TDF) (active)20.2%9.5%23.4%
Target-date fund (indexed)10.4%6.0%11.7%
Target-date fund (custom)4.5%6.0%4.0%
Target-risk fund3.4%1.2%4.0%
Balanced fund19.9%19.0%20.1%
Professionally managed account5.6%11.9%3.7%
Stable value fund/GICˆˆ9.0%14.3%7.3%
Money market fund18.8%19.0%18.7%
Other8.4%13.1%7.0%
Footnote: ˆˆGuaranteed investment certificate
Auto-Enrollment Default Deferral Rate
ALL MICRO<$1MM$1MM–$5MM
1%10.8%8.8%11.4%
2%10.2%11.3%9.9%
3%43.5%38.8%44.9%
4%9.4%8.8%9.6%
5%6.8%8.8%6.3%
6%8.0%10.0%7.4%
Other11.4%13.8%10.7%
Participation Eligibility
ALL MICRO<$1MM$1MM–$5MM
Immediately upon hire18.1%17.4%18.4%
Within 3 months22.6%21.8%22.9%
After 4 to 6 months10.0%7.6%10.9%
After >6 months49.4%53.2%47.9%
Don’t know42.8%51.5%39.6%
Plan Participation Rate
ALL MICRO<$1MM$1MM–$5MM
Average74.2%72.8%74.8%
Median80.0%80.0%80.0%
Approximate Maximum Match
ALL MICRO<$1MM$1MM–$5MM
>100% of 6% of salary7.1%8.0%6.9%
100% match of 6% 10.3%12.9%9.5%
51%–99% of 6%31.4%33.9%30.7%
50% match of 6% 26.3%21.4%27.9%
<50% of 6% 24.7%23.7%25.1%
Participants Maximizing Match
ALL MICRO<$1MM$1MM–$5MM
All or nearly all participants (>90%)30.9%37.1%29.0%
Vast majority (>75%)25.0%20.5%26.4%
> average (50%–75%)19.4%13.1%21.4%
< average (25%–50%)11.3%10.9%11.4%
A minority (10%–25%)7.3%6.6%7.6%
Very few (<10%)6.1%11.8%4.3%
Roth 401(k) contribution50.9%46.6%52.5%
Offer financial advice76.5%71.6%78.4%
Employer Contribution Types Made to Participant Accounts
ALL MICRO<$1MM$1MM–$5MM
Match on participant contribution58.4%50.5%61.4%
Profit-sharing contribution26.9%21.7%28.9%
Nonelective contribution8.6%8.2%8.8%
Other contribution13.0%12.0%13.3%
No employer contribution14.3%21.5%11.5%
When Participants Are 100% Vested
ALL MICRO<$1MM$1MM–$5MM
Immediately on enrollment31.7%42.7%28.3%
6 months0.7%0.9%0.7%
1 year5.0%6.7%4.5%
2 years3.6%2.2%4.0%
3 years9.5%9.8%9.4%
4 years3.8%1.3%4.5%
5 years26.4%23.6%27.2%
>5 years19.4%12.9%21.3%
Frequency of Matching Contributions
ALL MICRO<$1MM$1MM–$5MM
Each pay period74.5%76.1%73.9%
Monthly5.8%7.0%5.4%
Quarterly1.9%1.3%2.0%
Annually16.8%13.9%17.6%
Other1.1%1.7%0.9%
Participants With Outstanding Loans
ALL MICRO<$1MM$1MM–$5MM
Average11.4%10.0%11.9%
Median8.0%5.0%8.7%
Participants Making Hardship Withdrawals
ALL MICRO<$1MM$1MM–$5MM
Average1.7%2.9%1.3%
Median0.0%0.0%0.0%
Number of Investment Options Offered
ALL MICRO<$1MM$1MM–$5MM
Average21.320.421.6
Median18.016.018.0
Number of Investment Options Held by Participants
ALL MICRO<$1MM$1MM–$5MM
Average6.66.56.7
Median5.05.05.0
Types of Investment Options Offered
ALL MICRO<$1MM$1MM–$5MM
Target-date funds (TDFs)58.8%46.5%62.4%
Target-risk funds48.1%49.7%47.6%
Balanced funds75.5%69.0%77.5%
Money market funds73.7%70.6%74.6%
Employer stock0.6%1.1%0.5%
Stable value funds46.1%33.7%49.8%
Real estate/REITs~~21.7%16.6%23.1%
Alternative investments5.6%9.6%4.4%
Socially responsible funds9.0%8.0%9.3%
Self-directed brokerage window7.2%4.8%7.9%
Mutual fund window16.2%19.8%15.1%
Footnote: ~~Real estate investment trusts
Custom Target-Date Fund Offerings
ALL MICRO<$1MM$1MM–$5MM
Already in place10.4%8.3%11.0%
Considering offering8.4%7.2%8.8%
Have not considered81.2%84.5%80.2%
Professionally Managed Accounts Offered
ALL MICRO<$1MM$1MM–$5MM
Yes30.8%28.4%31.6%
No55.6%54.0%56.1%
Unsure13.6%17.7%12.3%
Retirement Income Products Offered in Plan
ALL MICRO<$1MM$1MM–$5MM
Annuities/Income w/ guarantees6.6%6.2%6.7%
Annuities not offering guarantees2.9%1.9%3.2%
Other products w/o guarantees3.8%1.4%4.6%
Systematic withdrawals of balance54.0%48.4%55.8%
Approximate Average Expense Ratio of Plan Investments
ALL MICRO<$1MM$1MM–$5MM
<0.25% (<25 bps••)6.3%7.0%6.1%
0.25%–0.50% (25–50 bps)10.6%10.2%10.7%
0.51%–0.75% (51–75 bps)7.9%5.1%8.8%
0.76%–1% (76–100 bps)14.9%7.4%17.3%
1%–1.5% (101–150 bps)14.2%11.2%15.2%
1.6%–2.0% (160–200 bps)2.1%0.9%2.5%
2.1%–2.5% (210–250 bps)0.3%1.4%0.0%
>2.5% (>250 bps)0.0%0.0%0.0%
Don’t know43.6%56.7%39.3%
Footnote: ••Basis points
% of Plan Investments That Use Passive/Indexed Strategies
ALL MICRO<$1MM$1MM–$5MM
None29.2%41.9%25.2%
0%–10%21.7%17.2%23.1%
>10%–35%28.8%18.3%32.1%
>35%–50%9.3%10.2%9.0%
>50%–65%4.1%3.2%4.3%
>65%–90%3.3%3.2%3.3%
>90%3.7%5.9%3.0%
Investment Vehicles Used in DC Plan
ALL MICRO<$1MM$1MM–$5MM
Mutual funds91.9%88.5%92.9%
Separate accounts23.5%23.5%23.5%
Collective investment trust (CIT)7.3%9.0%6.8%
ETFsºº (outside of brokerage windows)3.4%7.0%2.2%
Other 4.4%3.5%4.7%
Footnote: ººExchange-traded funds
Frequency of Formal Review of Investment Options
ALL MICRO<$1MM$1MM–$5MM
Monthly0.8%0.9%0.7%
Quarterly15.9%10.4%17.7%
Twice a year14.4%8.1%16.4%
Annually41.5%37.8%42.7%
Every 1 to 2 years7.5%11.3%6.3%
Every >2 to 3 years5.1%6.3%4.7%
Every 3-plus years3.4%3.2%3.5%
Never11.3%22.1%7.9%
Investment Committee for the DC Plan
ALL MICRO<$1MM$1MM–$5MM
Employees only31.0%19.3%34.7%
Non-employees only1.6%0.9%1.9%
Employees and non-employees16.7%10.3%18.8%
Unsure of composition1.2%1.3%1.1%
No investment committee46.2%63.7%40.6%
Don’t know if we have committee3.3%4.5%2.9%
Investment Policy Statement for the DC plan
ALL MICRO<$1MM$1MM–$5MM
Yes41.3%28.1%45.6%
No40.6%50.0%37.5%
Don’t know18.1%21.9%16.9%
Participant Services Ratings (1–7 scale; 7 = extremely satisfied)
ALL MICRO<$1MM$1MM–$5MM
Participant call center6.446.506.42
Website functionality6.296.356.27
Online tools/services6.276.316.26
Participant statements6.496.496.49
Education program6.056.086.04
Communication materials6.146.226.11
Enrollment assistance6.256.286.23
Retiree services/payments6.386.426.37
On-site meetings5.915.855.93
Range of investments6.366.346.37
Loan/Withdrawal processing6.516.576.49
Beneficiary administration6.366.466.32
Participant fee disclosure6.306.296.31
Sponsor Services Ratings (1–7 scale; 7 = extremely satisfied)
ALL MICRO<$1MM$1MM–$5MM
Sponsor website/tools6.276.326.25
Plan reports/benchmarking6.216.266.20
Form 5500 processing6.506.606.46
Compliance support/testing6.486.516.47
Legislative/Regulatory updates6.236.246.22
Account team knowledge6.516.536.50
Service responsiveness6.536.536.53
Staff consistency6.466.496.45
Plan design flexibility6.396.436.37
Fee “cost-to-value”6.106.096.11
Length of Relationship With Provider
ALL MICRO<$1MM$1MM–$5MM
Up to 1 year5.7%4.9%6.1%
>1 year to 3 years15.8%19.9%14.2%
>3 years to 5 years16.7%21.1%15.0%
>5 years to 7 years15.3%16.0%15.0%
>7 years43.4%34.9%46.8%
Don’t know3.1%3.2%3.0%
Frequency of Formal Review of Providers
ALL MICRO<$1MM$1MM–$5MM
Annually38.9%38.0%39.2%
Every 1 to 2 years13.7%13.0%14.0%
Every >2 to 3 years12.5%10.2%13.4%
Every >3 to 5 years11.3%7.7%12.7%
Every 5-plus years6.4%4.9%7.0%
Never17.2%26.2%13.6%
Frequency of Formal Review of Administrative Costs/Fees
ALL MICRO<$1MM$1MM–$5MM
Annually56.9%56.2%57.1%
Every 1 to 2 years14.1%11.9%14.7%
Every >2 to 3 years10.4%8.0%11.2%
Every >3 to 5 years5.6%4.0%6.1%
Every 5-plus years3.6%3.1%3.8%
Never9.4%16.8%7.1%
Who pays for the plan’s admin/recordkeeping costs?
ALL MICRO<$1MM$1MM–$5MM
Participants—via direct fees14.3%13.5%14.5%
Shared—participants and sponsors14.4%14.4%14.3%
Sponsor/Employer pays directly52.8%56.8%51.5%
None—fees paid by revenue sharing5.9%4.1%6.5%
Unsure12.7%11.3%13.2%
Calculated total admin fees (all sources) in the prior year?
ALL MICRO<$1MM$1MM–$5MM
Yes38.6%34.4%39.9%
No45.7%49.1%44.6%
Unsure15.7%16.5%15.5%
If calculated, did you benchmark administrative fees?
ALL MICRO<$1MM$1MM–$5MM
Yes56.4%48.7%58.6%
No41.6%48.7%39.6%
Unsure2.0%2.6%1.8%
Source of Fee Benchmarking Data
ALL MICRO<$1MM$1MM–$5MM
Our current recordkeeper30.2%36.5%28.5%
Our current plan adviser/consultant42.0%36.5%43.4%
Adv/Consultant unaffiliated w/ plan15.8%10.8%17.2%
Other sources12.1%16.2%10.9%
Confidence Employees Will Achieve Retirement Goals by 65
ALL MICRO<$1MM$1MM–$5MM
Very confident3.5%7.0%2.4%
Confident9.3%8.9%9.4%
Somewhat confident27.3%25.7%27.9%
Only a little confident26.4%22.0%27.9%
Not at all confident23.8%24.3%23.7%
Unsure9.6%12.1%8.8%