More than two-thirds of government-sponsored defined contribution plans have taken steps to prevent market-timing activity by participants, according to the biennial survey of the National Association of Government Defined Contribution Administrators.
According to the survey, 75% of the 31 state-sponsored 457 plans; 59% of the 35 local-government 457 plans and 77% of the 12 government-sponsored 401(k) plans that responded to the survey have installed procedures to prevent market timing by participants.
The procedures limit the frequency and number of transactions a participant can make among investment options as well as the number of transfers allowed into and out of the plan's international equity funds.
The survey also reported that the participation rate of eligible employees in government-sponsored 457 plans rose to approximately 29% in 2003 from 17% in 2001.
More than 1 million of the 4.2 million government employees eligible to participate in the 66 government-sponsored 457 plans that responded to the survey made approximately $3.9 billion in deferrals in 2003. By comparison, in 2001 about $3.4 billion in deferrals was made by about the same number of the 6 million eligible employees in the 75 government-sponsored 457 plans that responded to that survey.
In government-sponsored 401(k) plans, surveyed for the first time in 2003, the participation rate was 34%, with 235,920 of eligible participants making deferrals in the nine 401(k) plans that responded to this question. (A total of 12 government-sponsored 401(k) plans responded to at least some questions in the survey and had total deferrals of approximately $954 million.)