More employees are participating in their 401(k) plans and increasing the amounts they're contributing to them, according to the latest survey from the Plan Sponsor Council of America.
More than 4 of 5 employees (84.9%) are contributing to their 401(k)s, up from 76.9% in 2010. The average deferral rate is also up. In 2017, employees contributed an average of 7.1%, the highest deferral rate since 2010 when it was 6.2%, according to the PSCA.
Companies, too, are opening their purse strings, contributing an average of 5.1% to 401(k) plans and combination profit-sharing/401(k) plans, up from 3.7% in 2008.
"Design enhancements that leverage behavioral finance insights such as automatic enrollment, coupled with generous employer matching contributions, are helping build a more financially secure retirement for America's workers," said Hattie Greenan, PSCA's director of research and communications, in a statement.
The use of automatic enrollment hit new highs with 61.2% of plans offering the feature. The most common default deferral rate is 3%, which is used by 32% of plans; followed by 6%, which is used by 23.8%. Only 2% use a default deferral rate of 6% or more, according to the survey results.
More plan sponsors are also allowing Roth 401(k) contributions, with 69.6% of plans offering the feature, almost double the 36.7% that did so in 2008.
Target-date funds, too, continue to rise in popularity. More than 7 in 10 plans (70.6%) offer the funds, up from 57.7% in 2008.
The study surveyed seven profit-sharing plans, 345 401(k) plans and 253 combination profit-sharing/401(k) plans.