Employer Contributions to 401(k) Plans Hit Record Highs
Event summary
- 91% of large 401(k) plans (100+ participants) offered employer contributions in 2023, up from 85% in 2007.
- Employer contributions accounted for 35% ($181 billion) of total contributions to large 401(k) plans in 2023.
- Total plan costs for large 401(k) plans fell from 1.02% in 2009 to 0.74% in 2023 on a plan-weighted basis.
- 43% of large 401(k) plans had automatic enrollment features in 2023, with adoption higher in larger plans.
The big picture
The report highlights the growing role of employers in bolstering retirement security through 401(k) plans, with record-high contribution rates and falling costs. This trend reflects broader industry shifts toward more employer-supported retirement savings vehicles and automated features designed to increase participation. The data underscores the importance of 401(k) plans in the private sector, with about 70 million active participants and millions of retirees benefiting from these structures.
What we're watching
- Cost Reduction Trends
- Whether the pace of declining plan costs can be sustained as smaller plans see the largest reductions.
- Automatic Enrollment
- How the growing adoption of automatic enrollment will impact participation rates and retirement savings outcomes.
- Employer Contribution Dynamics
- The strategic implications of employer contributions representing a third of total 401(k) plan contributions.