Target-date funds were used as investment options by 69.1% of 403(b) plans in the 2010 plan year, up from 51.2% a year earlier, according to a Profit Sharing/401k Council of America survey sponsored by Principal Financial Group.
Last year, the most common default options for 403(b) plans were target-date funds, at 34.2% of all plans, and lifestyle funds, at 28.9%, according to a news release describing the survey.
“People like what target-date funds do,” David Wray, president of Chicago-based PSCA, said in an interview, referring to the funds’ changing asset allocations over time.
Also, 12.3% of 403(b) plans had an automatic enrollment feature during the 2010 plan year, up from 11.5%.
The average participation rate for the 2010 plan year was 74.7%, vs. 75.8% for the 2009 plan year.
The survey said 22.6% of plans allow loans only for hardship purposes and 49.5% allow loans for any reason. The corresponding percentages in 2009 were 24% and 48.7%.
The online survey of 712 sponsors for the 2010 plan year was conducted in February and March, and the number of respondents was 29% higher than the survey of 403(b) plans for the 2009 plan year.