401(k) Specialist Issue 3 - 2017 - 44

401(k) THE CLOSE
A Reminder of Why Americans
Trust in Their 401(k)s
By Sarah Holden
DEFINED CONTRIBUTION
plans have long been a key
component of Americans'
retirement savings. And
with more than $5 trillion in
assets and about 54 million active
participants, 401(k) plans
are the most common type.
401(k) plans offer a wide
array of investment options
(28, on average). They often
include employer contributions,
as well as provide the
flexibility of a 401(k)-plan
loan feature. In fact, nearly
nine out of 10 participants are
part of plans that offer these
features.
Successful retirement
saving often relies on a paycheck-by-paycheck
commitment
over the course of a
career, and employees who
participate in 401(k) plans put themselves on the path to a secure retirement.
ICI recently asked Americans about their views regarding DC plans; their responses, described
and analyzed in American Views on Defined Contribution Plan Saving, 2016, show that
DC-owning households appreciate the savings and investment features of their plans.
Participants Agree: DC Plans Make Saving Easier
401(k) plans offer access to payroll deduction, tax-advantaged saving, and an opportunity
to save for retirement with each paycheck. Households with DC plan accounts indicate that
they appreciate these benefits.
Ninety percent of DC-owning households agree that their DC plan account helps them
think about the long term, not just their current needs; 91 percent agree that payroll deduction
makes it easier to save, and 44 percent agree that they probably wouldn't save for
retirement if they didn't have their DC plan at work. These results highlight the important
role that employers play in promoting retirement saving.
In setting up a 401(k) plan, an employer selects the investment options to offer-typically
stock, bond, and money market investments, and products that hold a diversified mix of
investments. Plan participants select from the plan's options.
Nearly all DC-owning households (96 percent) appreciate the choice and control offered
44
ISSUE 3 2017 | 401kSpecialist.com
" SUCCESSFUL
RETIREMENT SAVING
OFTEN RELIES ON A
PAYCHECK-BY-PAYCHECK
COMMITMENT OVER THE
COURSE OF A CAREER ... "
by their DC-account investments, while
most (81 percent) agree that their plan
offers a good lineup of investment options.
More than two-thirds indicate that knowing
that they're saving from every paycheck
makes them less worried about the stock
market-helping them to continue investing
even when the stock market is down,
and putting them in a position to ride the
market up when it rises.
Survey respondents also registered
overwhelming support for the current tax
treatment of their plan, as well as control
over retirement plan assets and income-
both while working and in retirement.
For example, nine in 10 US households
opposed taking away the tax advantages
of DC accounts or reducing the individual
contribution limits of DC accounts.
Even among households not currently
owning DC accounts or individual retirement
accounts (IRAs), more than eight in 10 were
opposed to taking away the plans' tax advantages
or reducing their contribution limits.
Sarah Holden is the Investment Company Institute's
(ICI) senior director of retirement and investor
research. This post first appeared at www.ici.org.
Full details on the survey and additional results can
be found at ICI's 401(k) Resource Center.

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401(k) Specialist Issue 3 - 2017

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