The Total View - (Page 37) Plan Design: Eligibility & Vesting Approximately 15 percent of plans with services provided by The Principal had immediate vesting, which was below the industry average of 39 percent. Among plans that did not have immediate vesting, a five-year graded schedule was the most common in the industry. The most common vesting schedule among plans with 1 Eligibility Requirements Eligibility Category Immediate 3 months 6 months 1 year Other The Principal Overall 12% 10% 16% 53% 9% Industry Benchmark1 48.5% 16.6% 16.6% 17.8% 6.2% services provided by The Principal was a six-year graded schedule. Safe Harbor Solutions In 2006, 19 percent of the 401(k) plans with recordkeeping services from The Principal were Safe Harbor plans. This increased from 13 percent in 2004. This plan design allows plan sponsors to automatically satisfy non-discrimination testing on salary deferral and matching contributions if the plans meet the Safe Harbor matching formula. Safe Harbor plans had deferral rates higher than non-Safe Harbor plans. In addition, participation rates in Safe Harbor plans were 14 percent higher than in non-Safe Harbor plans. Vesting The most common eligibility requirement was one year among plans with services provided by The Principal. Eligibility Category Immediate The Principal Overall 14% 9% 76% 1% Industry Benchmark2 39.5% 11.8% 46.1% 3.4% Individual 401(k) Plans Designed for owner-only businesses, including highly compensated professionals like doctors, attorneys, and real estate agents, the Individual 401(k) provides the same tax savings and higher contributions compared to a stand-alone solo 401(k) plan. It also offers the extra advantages of a traditional plan such as unique investment selection and a review program. Cliff Graded Other Fast Fact A Profit Sharing /401(k) Council of America Roth The Principal began offering Individual 401(k) arrangements at the end of 2004, and by the end of 2006 we had just over 500 Individual 401(k) plans. 401(k) Survey 2007 revealed that 61% of employers who do not offer a Roth feature in their 401(k) plan were considering or planning to add this feature.1 37
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