Contributions to 401(k) Plans Decline

Contributions to 401(k) Plans Decline
May 18, 2009

Contributions to 401(k) and other defined contribution retirement plans have taken a hit from the economic downturn. Results from a 2009 Culpepper Benefits Survey on 401(k) plans reveal that on average, 74 percent companies plan to provide contributions to employees 401(k) plans in 2009, down from 86 percent in 2008 (Figure 1, Table 1).

As companies increase in size, they are more likely to provide a contribution (Table 1).

Table 1: Employer Contributions to 401(k) Plans
	Percent of Companies Providing a Contribution to Employee 401(k) Plans
All Companies	74%
Number of Employees
1 to 100	55%
101 to 500	77%
501 to 2,500	79%
Over 2,500	92%
Industry Sector
Technology	71%
Life Sciences	74%
Other	83%
Ownership
Public	84%
Private	65%

Recent Changes in Level of Employer Contributions to 401(k) Plans
Participants were asked to describe how the level of their company’s contributions has changed since the economic crisis unfolded in 2008. Most companies (72 percent) have not changed the level of their contributions (Figure 2, Table 2).

However, 21 percent of companies have either decreased or eliminated employer contributions. Another four percent of companies are considering either eliminating or decreasing 401(k) contributions.

Instead of eliminating contributions, some participants reported modifying a portion or all of company contributions to be discretionary or tied to company performance.

Three percent of companies reported increasing their contributions to 401(k) plans in 2009, citing that a strong retirement benefit is an important part of their total rewards plan.

Table 2: Recent Changes in Level of Company 401(k) Contributions
	Percent of Companies
	Has Not Changed Company's Contribution	Has Eliminated Company's Contribution	Has Decreased Company's Contribution	Considering Decreasing or Eliminating Company's Contribution	Has Increased Company's Contribution
All Companies	72%	12%	9%	4%	3%
Number of Employees
1 to 100	76%	12%	7%	2%	3%
101 to 500	75%	9%	8%	6%	2%
501 to 2,500	65%	19%	8%	5%	3%
Over 2,500	65%	9%	17%	3%	6%
Industry Sector
Technology	68%	14%	9%	6%	3%
Life Sciences	78%	6%	8%	3%	5%
Other	74%	15%	9%	0%	2%
Ownership
Public	66%	11%	12%	6%	5%
Private	75%	14%	6%	3%	2%

Formulas Used to Calculate Employer Contributions and Other 401(k) Plan Features
In addition to the data tables and figure above, we provide a more comprehensive report with additional information and data tables covering the following:

Enrollment Eligibility Requirements
Automatic Enrollment Arrangements
Roth 401(k) Accounts
Structures and Formulas Used to Calculate Employer Contributions
Vesting of Employer Contributions

Availability of Comprehensive Report as Downloadable PDF

Free to participants in 2009 401(k) Plans Survey
Free to subscribers of Culpepper Benefits Survey Package
(includes Culpepper Library and Small Company Plus subscribers)
$295 for non-participants and non-subscribers (Order Form)

Data Source: Culpepper Benefits Survey of 249 organizations.
Survey Dates: March 12 through April 30, 2009

Breakdown by Sector:
Technology 63%, Life Sciences 16%, Healthcare Services 2%, Energy 2%, Other 17%

Participant Breakdown by Number of Employees:
Up to 100: 24%, 101 to 500: 36%, 501 to 2,500: 24%, 2,501 to 10,000 11%, Over 10,000: 4%

Participant Breakdown by Ownership/Corporate Status:
Public 36%, Private 59%, Non-Profit 4%, Other 1%

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Contributions to 401(k) Plans Decline May 18, 2009

Contributions to 401(k) Plans Decline
May 18, 2009