Sizing up your company's 401(k) plan.
 What is the waiting period before new employees can enroll in the plan?
Survey results: Waiting periods ranged from 1 to 12 months; 58% required employees to wait 12 months.
 Does the plan allow all employees--salaried, hourly, union and part-time--to participate?
Survey results: 97% covered salaried employees; 85% covered hourly employees; 69% allowed part-time employees to participate (sometimes in a separate plan); 55% of union employees participated in a separate plan.
 Does the plan permit rollovers from other qualified retirement plans, such as those of previous employers?
Survey results: 93% accepted rollovers--almost all (92%) without a waiting period.
EMPLOYER MATCHING CONTRIBUTIONS
 Does the employer match employee contributions to the plan?
Survey results: 88% made matching contributions.
 How are employer contributions determined?
Survey results: The most common formula was fixed amount per dollar up to a maximum percentage of salary (63%). The most common match was 40.50 per dollar contributed (51%). The most common matching percentage was up to 5% of salary (42%).
 How long must employees wait before they are fully vested in employer contributions?
Survey results: 26% had immediate vesting, 24%, however, had to wait five years before becoming fully vested.
 How many investment options are available for participants to chose from?
Survey results: 96% reported having four or more options.
 How frequently can employees change their investment elections?
Survey results: 58% allowed changes every pay period (up from only 4% in 1989).
LOANS AND WITHDRAWALS
 Does the plan permit participant loans?
Survey results: 86% had loan provisions, with 77% requiring a minimum loan amount of $1,000 or more.
 Does the plan allow hardship withdrawals? If so, under what circumstances?
Survey results: 93% permit hardship withdrawals. Medical expenses, purchase or retention of a principal residence and college tuition are the most common hardships.
 Does the plan sponsor offer a voice-response system, that allows participants to get information on account balances and make changes in investment options?
Survey results: 84% used voice-response systems (up from 35% in 1993).
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|Publication:||Journal of Accountancy|
|Date:||Mar 1, 1998|
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