Certified Public Accountants | Business Advisors


Less Plan “Leakage.” The economic recovery appears to have slowed hardship distributions and participant loans from 401(k) plans, according to the 2013 Trends in 401(k) Plans and Retirement Rewards survey of American Benefits Council and WorldatWork member companies. From 2008 to 2012, the percentage of employers reporting an increase in the number of plan participants taking hardship withdrawals during the previous 12-month period fell from 43% to 25%. The percentage of employers reporting an increase in participant loans dropped from 49% to 37%.

Matching Contributions. Employers participating in the Trends study also reported that many plan participants are not taking full advantage of their employer matching contributions. More than a third of the employers (34%) said that half or fewer of their plan participants deferred enough compensation to receive the maximum matching contribution available to them. Fifty-seven percent reported that more than half, but less than 90%, of participants took advantage of the full match available. Only 9% of employers said 90% or more of their plan participants were receiving the full match.

Cash Balance Plans on the Rise. From IRS Form 5500 data for 2011 (the most recent available) and reported in the 2013 Cash Balance Research Report: The number of new cash balance plans added in 2011 was 1,097, bringing the total number of plans nationwide to almost 8,000 and participants in these plans to more than 11 million. The total assets held in cash balance plans in 2011 was $724 billion.

The general information in this publication is not intended to be nor should it be treated as tax, legal, or accounting advice. Additional issues could exist that would affect the tax treatment of a specific transaction and, therefore, taxpayers should seek advice from an independent tax advisor based on their particular circumstances before acting on any information presented. This information is not intended to be nor can it be used by any taxpayer for the purpose of avoiding tax penalties.

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