Employee participation in 401(k) plans continues to grow even as contribution rates and plan designs evolve to meet changing economic conditions and new regulatory requirements. That according to the Plan Sponsor Council of America’s (PSCA) Annual Survey, released Nov. 12.
Despite economic uncertainty and shifting financial pressures, we continue to see strong engagement in workplace retirement plans. The survey found that 87.4 percent of eligible employees contributed to their 401(k) accounts up from 86.9 percent the previous year. While participation climbed modestly, average contribution rates dipped slightly, signaling that more employees are saving—though many at cautious levels amid continued economic pressures. Average employee deferrals were 7.7% of pay (down from 7.8% in 2023), and employer contributions averaged 4.8% (down from 4.9%) for a total savings rate of 12.5% of pay.
Correspondingly, hardship withdrawals rose for the second consecutive year – 2.7% of participants took a hardship withdrawal in 2024, up from 2.1% in 2023 – while plan loan usage declined, suggesting a shift in how workers access funds during periods of financial strain.
Other plan design features continue to see growth including automatic enrollment, Roth, investment options, and mobile access:
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- Automatic features expand: 64% of plans now use automatic enrollment and 75% of those plans increase the deferral rate over time.
- Roth availability increases: 95.6% of plans now offer Roth 401(k) contributions. 60% allow in plan Roth conversions while 20% offer Roth treatment of employer contributions.
- Investment Options Climb: The average number of investment options was 19 for a handful of years, jumped to 21 in in 2020, increased to 22 last year, and increased again 23 as plans continue to add investment options to their lineups.
- Managed accounts grow: More than half of plans (55%) now provide managed account options, up 11 points in three years.
- Mobile access soars: 73% of organizations now provide plan access via mobile technology, up from 63% two years ago.
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SECURE 2.0
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Employers are steadily implementing SECURE 2.0 Act provisions designed to expand savings opportunities. Nearly all plans (97.6%) are preparing for the Roth treatment of catch-up contributions, and 73% have already adopted the “super catch-up” feature for employees aged 60–63.
Penalty-free distributions are becoming more common, with 70% of organizations now offering natural disaster withdrawals and more than half adopting provisions for birth or adoption expenses.
Additional SECURE 2.0 data includes:
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- Roth Employer Contributions: 20 percent of plans now offer this feature, up from 13 percent in 2023, with a third of plans considering adding it.
- Emergency Withdrawals and Savings: 36% have adopted the $1,000 per year emergency withdrawal provision and while only 1.3% have introduced emergency savings (PLESA) accounts, that is triple the percent the year before and 14% of plan sponsors are considering them.
- Student Loan Match: 1.9 percent of plans match student loan payments, about the same as last year.
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About the PSCA Survey
Now in its 68th year, the PSCA’s Annual Survey of 401(k) Plans is the industry’s most comprehensive source of defined contribution plan benchmarking. The 2024 edition reports on the 2024 plan-year experience of 755 401(k) plans. The report includes 222 data tables covering plan design, participation, investments, and emerging trends across organizations of all sizes and industries. More information can be found at: https://www.psca.org/research/401k.