Can employees typically choose how their 401(k) funds are invested, and how often can those
funds be invested in company stock?
Of workers that participate in savings and thrift plans, 91 percent
may choose how their funds are invested and 76 percent may choose how the
employers matching funds are invested, according to 2005 data on
benefits from the National Compensation Survey.
Savings and thrift programs include pre-tax features established under the
provisions of Section 401(k) of the Internal Revenue Code.
Nine out of ten employees were able choose among various investment
vehicles for their own contributions and over three-fourths had this ability
for contributions made by their employer. One in four employees
had the option of investing their own contributions in company stock, while
one of five had that option with their employers contribution. The other
choices might include common stock funds, bond funds, government securities,
and guaranteed investment contracts.
The share of participants in savings and thrift plans who are permitted to
choose investments for their own contributions have remained consistent at about 9
out of 10 since 1985. During the same period, the share of employees permitted to
choose investments for their employers matching contribution has risen from about
half to over three-fourths. The ability of employees to choose company stock as one
of their investment options has dropped sharply during the past 20 years. For
employee contributions, only one in four employees can choose company stock as an
investment choice in 2005, compared with 7 out of 10 in 1985. Employee choice of
company stock as an investment choice for employer matching funds fell two-thirds,
from 61 percent in 1985 to 19 percent in 2005. (See table 1.)
The following links provide more statistical information on 401(k) plans:
www.bls.gov/opub/cwc/archive.htm
www.bls.gov/ncs/ebs/
The following link provides additional sources of information on retirement
plans from the Department of Labor:
www.dol.gov/ebsa/consumer_info_pension.html
Table 1. Percent of full-time employees
participating in savings and thrift plans by ability to choose
investments, 1985-2005
Provision
|
1985
|
1989
|
1993
|
1997
|
2000
|
2005
|
Employee contributions:
|
|
|
|
|
|
|
Investment choice
|
90
|
90
|
86
|
87
|
91
|
91
|
Choice of company stock
|
70
|
60
|
48
|
42
|
38
|
25
|
Employer contributions:
|
|
|
|
|
|
|
Investment choice
|
48
|
53
|
58
|
65
|
65
|
76
|
Choice of company stock
|
61
|
50
|
38
|
25
|
20
|
19
|
Note: Surveys conducted in 1985 through 1997 included
medium and large private establishments with 100 employees or more.
The 2000 and 2005 surveys included all private establishments.
Last Modified Date: November 3, 2008