Chapter 8: 401(k) Cash or Deferred Arrangements 79 deferred investment income and permitting ... Additional details can found in Chapter 7 of the 5th edition of Fundamentals ... (k)

79Chapter 8: 401(k) Cash or Deferred Arrangements

CHAPTER 8

401(K) CASH OR DEFERRED ARRANGEMENTS

IntroductionA cash or deferred arrangement under Sec. 401(k) of the Internal

Revenue Code (IRC) allows an employee to elect to have a portion of his or her compensation (otherwise payable in cash) contributed to a qualifi ed retirement plan (meaning it is qualifi ed to receive preferential tax treat-ment). Typically, the employee contribution is treated not as current income but most commonly as a pretax reduction in salary, which is then paid into the plan by the employer on behalf of the employee.1 In some cases, an employer allows employees to elect to have profi t-sharing allocations con-tributed to the plan. In both instances, the employee defers income tax on the 401(k) plan contribution until the time of withdrawal. Whatever portion is not contributed to the 401(k) arrangement may be taken in cash, which is considered current income and taxed accordingly.

Various forms of deferred compensation have existed for many years. As early as the mid-1950s, cash or deferred profi t-sharing plans using pretax employee contributions were permitted by the Internal Revenue Service (IRS) as long as at least one-half of the participants electing to defer were in the lowest paid two-thirds of all plan participants. It was not until the late 1970s that the U.S. Congress acted to sanction cash or deferred arrange-ments, formalize their design, and provide for regular guidance. The Revenue Act of 1978 added Sec. 401(k) to the IRC—hence the commonly used refer-ence to this type of arrangement as a 401(k) plan. These arrangements are a popular vehicle for retirement savings, and have become the dominant form of employment-based retirement benefi t. They provide employees the ability to save on a tax-effective basis by typically deferring current taxes on contributions until a future time (when taxes might be lower), providing tax deferred investment income and permitting employers some fl exibility in retirement plan design and contribution levels.

In recent years there have been two extremely important developments with respect to plan design for these arrangements. Roth 401(k) plans (described later in this chapter) provide the employee with the opportunity 1 At one time it was common to have a similar type of plan in which employees generally made contributions with after-tax money. These plans were typically referred to as “thrift plans.” Additional details can found in Chapter 7 of the 5th edition of Fundamentals of Em-ployee Benefi t Programs. Note that after-tax contributions to 401(k) plans took on a complete-ly new character with respect to tax advantages beginning in 2006 with the advent of Roth 401(k) contributions (described later in this chapter).

80 Fundamentals of Employee Benefi t Programs

to contribute money on an after-tax basis but to receive (under specifi c cir-cumstances) both the principal and any accrued investment income on these contributions tax-free at retirement. The second development—automatic enrollment—appears to have the potential to radically increase participa-tion rates among those eligible to participate in a 401(k) plan, especially the young and low-paid. Instead of informing new (and in some cases existing) employees of the opportunity to enroll in a 401(k) plan and relying on the employees to voluntary enroll for one of a variety of reasons (typically the perceived tax advantages and/or employer match), an automatic enroll-ment feature will enroll these employees in the 401(k) plan at a default employee contribution rate and a default asset allocation until such time as the employee either changes the contribution rate and/or asset allocation or chooses to opt out of the plan.2

EligibilityMost private fi rms may establish 401(k) arrangements. State and local

governments may not maintain 401(k) arrangements unless they were adopted before May 6, 1986, but can set up somewhat similar plans under IRC Sec. 457 (see box on facing page). Employees usually become eligible to participate in 401(k) arrangements after meeting a service requirement. For a 401(k) arrangement, the maximum service (waiting) period is one year. Vesting—the employee’s attainment of nonforfeitable rights to benefi ts—of employee contributions and some employer contributions must be immediate. Employer matching contributions must be vested in accordance with a schedule that provides vesting at least as rapidly as 100 percent vesting after three years of vesting service (or 20 percent vesting per year beginning with year two). Other types of employer contributions are subject to the typical minimum vesting standards under the Employee Retirement Income Security Act of 1974 (ERISA).

These features are what distinguish defi ned contribution plans from defi ned benefi t plans (the “traditional” pension), which are typically funded entirely by the employer (in the private sector), defi ne the ultimate payout based on a formula using tenure and salary, and are often defi ned in terms of a life annuity. (For more information, see chapter on “Defi ned Benefi t and Defi ned Contribution Plans: Understanding the Differences.”)

2 A complete description of automatic enrollment features for 401(k) plans and the impact of the Pension Protection Act of 2006 is contained in the appendix on the Pension Protection Act at the end of this section.


Types of 401(k) ArrangementsThere are essentially two ways a 401(k) arrangement can be designed:

through an actual salary reduction or through a profi t-sharing distribu-tion. In a salary reduction arrangement, the employee may elect to have a percentage of salary contributed to the plan (otherwise payable in cash), thereby reducing current salary and reducing the base on which federal income and some state taxes are calculated. These arrangements must be included in an employer’s profi t-sharing, stock bonus, pre-ERISA money-purchase, or rural electric cooperative plan. They can be designed to include employee contributions only, employer contributions only, or both employee and employer contributions. In a cash or deferred profi t-sharing arrange-ment, the employee is offered the option of deferring a profi t-sharing distribution (or some portion of it) to a trust account or taking the distribu-tion in cash. In both arrangements, the deferral and any income thereon accrue tax free until distribution. Any distribution taken in cash from the profi t-sharing arrangement is currently taxed.

ContributionsFour types of contributions are normally paid to 401(k) plans:3

3 A fi fth type of contribution (catch-up contribution) is explained later in the chapter.

Pick a Number: Retirement Plan TypesThere are three different sections of the Internal Revenue Code

(IRC) that establish salary-reduction retirement plans, based on the sector of employment:• Sec. 401(k): Private-sector salary reduction plan.• Sec. 403(b): Nonprofi t sector salary reduction plan.• Sec. 457: Public-sector salary reduction plan.

All of these plans are voluntary (meaning the employer can choose whether or not to offer a plan to its workers) and all are defi ned con-tribution plans (meaning they defi ne how much the worker—and the employer, if it chooses to—will contribute to a worker’s retirement account. Typically in these types of plans, the worker directs at least a portion of how the contributions will be invested (within the investment options offered by the employer), and bears all the investment risk. Benefi ts are usually distributed as a lump sum.


Elective—tax-deferred employee contributions in the form of a salary reduction (administered by the employer on behalf of the employee).

Matching—employer contributions that match employee contributions (although the employer does not typically provide a full dollar-for-dollar match).

Nonelective—contributions other than matching made by the employer from employer funds. Sometimes these are made to help satisfy nondiscrimi-nation tests (see following discussion).

Voluntary—after-tax employee contributions not made through salary reduction.

Plan participants may be allowed to direct the investment of 401(k) con-tributions (sometimes just their own contributions, sometimes the employer contributions as well). Investment options commonly include: a fi xed (or guaranteed investment contract (GIC)) fund, which invests in a guaranteed interest contract with an insurance company; a balanced fund, which is designed to provide stability as well as growth through an investment mix of stocks and bonds; and an equity fund, which historically has demonstrated the most potential for growth but also the most risk. Investments in this fund are made in common stocks. The different funds allow the participant the option to direct investments toward his or her individual retirement planning goal. Other options sometimes available include bond funds, money market funds, fi xed income securities, target-date funds (explained in the section on automatic enrollment) and company stock.

Employee elective contributions to a 401(k) arrangement may be limited (to $16,500 in 2009 with cost-of-living adjustments scheduled thereafter) and are coordinated with elective contributions to simplifi ed employee pensions and SIMPLE plans (see chapter on SEPS and SIMPLES). If the employee is age 50 or over, an additional “catch-up” contribution is allowed.4 The additional contribution amount is $5,500 in 2009 and indexed for infl ation thereafter. Employee after-tax contributions and employer matching contri-butions are limited under IRC Sec. 401(m).

The limit on total employer and employee contributions to a qualifi ed 401(k) plan is governed by the same rules as other defi ned contribution plans under IRC Sec. 415. In general, the sum of the employer’s contribution (including the amount the employee elected to contribute through salary reduction plus any employer matching contributions), any after-tax employee contributions, and any additions from former employee’s forfeitures may not

4 Catch-up contributions are in addition to the participant’s regular deferral contributions. Catch-up contributions are not subject either to the actual deferral percentage test or the limit on annual additions, provided all employees 50 or older are eligible to make catch-up contributions.


exceed the lesser of 100 percent of an employee’s compensation or $49,000 (in 2009, this number was indexed for infl ation in future years).5 Compensation up to $245,000 (in 2009, indexed) is used in determining the limit.

Nondiscrimination RequirementsLike other qualifi ed retirement plans, 401(k) arrangements should be

designed to minimize the probability that a plan discriminates in favor of highly compensated employees in terms of coverage and participation in the plan and contributions provided. The rules for coverage and participa-tion are the same as those for other qualifi ed retirement plans (under Secs. 410(b) and 401(a)(26)). However, a special test for 401(k)s that limits elec-tive contributions of highly compensated employees replaces the general plan rules prohibiting discrimination in contributions and benefi ts (under Sec. 401(a)(4)). The test, known as the ADP (or actual deferral percentage) test, must be run annually in many cases; however, the Small Business Job Protection Act of 1996 provides two alternatives to the ADP test. Effective for taxable years beginning after 1996, 401(k) nondiscrimination require-ments may be circumvented by employers with 100 employees or less by adopting a Savings Incentive Match Plan for Employees (SIMPLE) (see chapter on SEPs and SIMPLEs for details). Effective for years beginning after Dec. 31, 1998, two safe-harbor methods of meeting the ADP tests are available (see discussion later in this chapter for details). Certain of the other rules under the Sec. 401(a)(4) regulatory scheme may be applicable to 401(k) arrangements.

The ADP test works this way: The eligible group of employees (defi ned as those employees who are eligible for employer contributions under the plan for that year) is divided into the highly compensated and the nonhighly compensated. Then, within each group, the percentage of compensation that is contributed on behalf of each employee is determined.6 The percentages for the employees are totaled and averaged to get an actual deferral percent-

5 If a plan participant terminates, the nonvested benefi ts are forfeited and become available for other plan uses. They may be reallocated among employees or used to reduce employer contributions. (For further discussion of Sec. 415 limits, see chapter on retirement plans.)6 The Small Business Job Protection Act of 1996 amended Sec. 401(k)(3)(A) and Sec. 401(m)(2)(A), effective for plan years beginning after December 31, 1996, to provide for the use of prior year data in determining the ADP and ACP of nonhighly compensated employ-ees, while current year data are used for highly compensated employees. Alternatively, an employer may elect to use current year data for determining the ADP and ACP for both highly compensated employees and nonhighly compensated employees, but this election may be changed only as provided by the Secretary. Prior to the effective date of these amend-ments, plans were required to use current year data in determining the ADP and ACP for both types of employees. A special rule is used for determining the ADP and ACP for non-highly compensated employees for the fi rst plan year of a plan (other than a successor plan).


age—or ADP—for the group. The ADP for the highly compensated group is then compared with the ADP for the nonhighly compensated group. The ADP test may be satisfi ed in one of two ways.

Test 1—The ADP for the eligible highly compensated may not be more than the ADP of the other eligible employees multiplied by 1.25 (the basic test).

Test 2—The excess of the ADP for the highly compensated over the non-highly compensated may not be more than 2 percentage points, and the ADP for the highly compensated may not be more than the ADP of the nonhighly compensated multiplied by 2 (the alternative test).

For example, if the ADP for the nonhighly compensated group is 4 percent, and the ADP for the highly compensated group is 6 percent, are the nondiscrimination rules satisfi ed?

Test 1—Because 6 percent (the ADP of the highly compensated) is greater than 5 percent (4 percent x 1.25), test 1 is not satisfi ed.

Test 2—Because 6 percent (the ADP of the highly compensated) is not more than 2 percentage points more than 4 percent (the ADP of the non-highly compensated) and 6 percent is not more than 8 percent (the ADP of the nonhighly compensated multiplied by 2), test 2 is satisfi ed.

Because one of the tests has been satisfi ed, the nondiscrimination rules are, therefore, satisfi ed. As mentioned earlier, these rules apply to employee elective deferrals. Employee after-tax and employer matching contributions in 401(k) arrangements and any other qualifi ed retirement plan are subject to a parallel rule called the actual contribution percentage (ACP) test under IRC Sec. 401(m). The test is essentially the same as the ADP test applied to elective contributions.

DistributionsThe ability to withdraw funds is more restricted in a 401(k) arrangement

than in other types of retirement plans. Distributions of 401(k) funds prior to age 59½ are generally subject to a 10 percent penalty tax (in addition to regular income tax). Distributions of 401(k) accumulations received after the attainment of age 59½ are taxed just as other qualifi ed plan distribu-tions. (For a detailed discussion of these rules, see chapter on planning for retirement.)

In general, distributions of employee elective contributions (and any nonelective or matching contributions used to satisfy the ADP test) may be made before age 59½ only in the case of death, disability, separation from service, plan termination if there is no establishment or maintenance of another defi ned contribution plan (other than an employee stock ownership plan), or fi nancial hardship. Voluntary employee after-tax contributions,


some matching employer contributions, and applicable earnings are not subject to these rules.

Hardship Defi ned— When the term was originally defi ned in 1981 by the IRS in proposed regulations, a two-part defi nition was set out that said that the participant must (1) have an “immediate and heavy” fi nancial need and (2) have no other resources “reasonably” available. These rules required the employer to investigate the individual circumstances of the hardship applicant. Until 1988, the only other regulatory guidance came from individ-ual plan IRS revenue rulings. In August 1988, IRS issued fi nal regulations in which it retained the two-part defi nition of hardship but clarifi ed the condi-tions under which each of these would be met. Each part may be satisfi ed through either a “facts and circumstances” test or safe harbor rules. The safe harbors provide a set of events that may be deemed automatically to cause an “immediate and heavy fi nancial need” and that would satisfy the “other resources” provision.

Immediate and Heavy Need—Under the facts and circumstances rule, a need is defi ned as immediate and heavy if the need can be determined by the facts and circumstances surrounding the hardship request. Under the safe harbor test, a distribution will be deemed to be immediate and heavy if it is for medical expenses; purchase of a principal residence for the employee; tuition for post-secondary education, but only for the next 12 months; and prevention of eviction or mortgage foreclosure.

Determining Financial Need from Reasonably Available Resources—To determine that a fi nancial need cannot be met by other reasonably available resources under the facts and circumstances test, the employee must show that (1) the distribution does not exceed the amount required to meet the need and (2) the need cannot be met from other rea-sonably available resources (including assets of the employee’s spouse and minor children). An employer may demonstrate that these provisions are met without an independent investigation of the applicant’s fi nancial affairs if the employer reasonably relies on the participant’s representation that the need cannot be relieved by insurance, reasonable liquidation of other assets, the cessation of employee contributions under the plans, and other plan distributions or loans from either the plan or commercial sources.

The safe harbor rules for establishing fi nancial need are satisfi ed if: • The hardship withdrawal does not exceed the amount needed.• The employee has obtained all distributions (other than for hardship)

and all nontaxable loans available from all of the employer’s plans.• The employee’s contributions under all other employer plans are sus-

pended for 6 months after the hardship withdrawal.


• The dollar limit on pretax contributions for the year after the hardship withdrawal is reduced by the amount of pretax contributions made during the year in which the hardship occurred.

Furthermore, the amount available for a hardship distribution consists only of employee elective contributions and investment earnings that have accrued through Dec. 31, 1988. Most hardship withdrawals are subject to the early distribution penalty tax, discussed later in this chapter.

Loans—An employee may be able to borrow funds from the plan if the plan permits. The rules governing loans from a 401(k) are essentially the same as those described in chapter on profi t-sharing plans.

TaxationContributions—Elective, nonelective, and matching contributions to a

qualifi ed Sec. 401(k) arrangement are excludable from the employee’s gross income until distribution. The employee thus defers federal income tax until the time the benefi t is distributed. The deferral of taxation applies also to some states and municipality tax provisions but not to Social Security and unemployment taxes. Voluntary employee after-tax contributions are taxable on a current basis. Earnings generated by any of these contributions are not taxed until withdrawal.

An employer may claim a business deduction for contributions to a 401(k) plan up to statutory limits defi ned under IRC Sec. 404(a). If the 401(k) is part of a profi t-sharing plan, the maximum annual deduction is generally limited to 25 percent of the total compensation of participating employees. (For a complete discussion of deduction limits, see the chapter on profi t-sharing plans.)

Roth 401(k)s

Beginning in 2006, 401(k) plans may include a qualifi ed Roth con-tribution program under IRC Sec. 402A. Unlike a regular 401(k) plan, contributions to a Roth 401(k) plan are made on an after-tax basis; however, distributions of those contributions and investment income attributable to them may be received tax free after age 59½ if a fi ve-year holding period is satisfi ed.

Roth 401(k) contributions will have many similarities to regular (pre-tax) 401(k) contributions. For example, Roth 401(k) contributions: • Together with pre-tax contributions, will be subject to the maximum

contribution dollar limit for the year (by 2009 this will be $16,500 plus


an additional $5,500 for participants eligible to make catch-up contribu-tions as explained later in this chapter);

• Are also included with pre-tax 401(k) contributions in applying the ADP nondiscrimination tests;

• Are immediately vested; • Must satisfy the minimum distribution rules beginning at age 70½

(unless he or she continues to work past that age and is not a 5 percent owner).

Distributions—As with pre-tax 401(k)s, distributions of Roth 401(k) funds prior to age 59½ are generally subject to a 10 percent penalty tax (in addition to regular income tax). Distributions of Roth 401(k) accumulations received after the attainment of age 59½ are taxed just as other qualifi ed plan distributions. (For a detailed discussion of these rules, see chapter on planning for retirement.)

401(k) Safe Harbors The Small Business Job Protection Act of 1996 (SBJPA) added new

sections to the IRC, effective for plan years beginning after Dec. 31, 1998, to provide design-based safe harbor methods for satisfying the ADP test and the ACP test. A 401(k) plan is treated as satisfying the ADP test if the plan meets certain contribution and notice requirements. A defi ned contribution plan is treated as satisfying the ACP test with respect to matching con-tributions if the plan meets the contribution and notice requirements and in addition meets certain limitations on the amount and rate of matching contributions available under the plan. IRS Notice 98-52 and IRS Notice 2000-3 provide guidance on the safe harbor methods for satisfying the ADP and ACP tests.

ADP Test Safe Harbor—A 401(k) plan is treated as satisfying the ADP test for a plan year if, for the entire plan year, the arrangement satisfi es the safe harbor contribution and the notice requirements. The safe harbor contri-bution requirement is satisfi ed for a plan year if the plan satisfi es either (1) the matching contribution requirement or (2) the nonelective contribution requirement.7

Contribution Requirement—The matching contribution requirement is satisfi ed if, under the terms of the plan, safe harbor matching contribu-tions under either the basic matching formula or an enhanced matching

7 The safe harbor contribution requirement must be satisfi ed without regard to the permit-ted disparity rules described in the chapter on nondiscrimination and minimum coverage requirements for pension plans.


formula described below are required to be made on behalf of each nonhighly compensated employee who is an eligible employee.

The basic matching formula provides matching contributions on behalf of each nonhighly compensated employee who is an eligible employee in an amount equal to (1) 100 percent of the amount of the employee’s elective contributions that do not exceed 3 percent of the employee’s compensation and (2) 50 percent of the amount of the employee’s elective contributions that exceed 3 percent of the employee’s compensation but do not exceed 5 percent of the employee’s compensation.

An enhanced matching formula provides matching contributions on behalf of each nonhighly compensated employee who is an eligible employee under a formula that, at any rate of elective contributions, provides an aggregate amount of matching contributions at least equal to the aggregate amount of matching contributions that would have been provided under the basic matching formula. In addition, under an enhanced matching formula, the rate of matching contributions may not increase as an employee’s rate of elective contributions increases.

The matching contribution requirement is not satisfi ed if, at any rate of elective contributions, the rate of matching contributions that would apply with respect to any highly compensated employee who is an eligible employee is greater than the rate of matching contributions that would apply with respect to any nonhighly compensated employee who is an eli-gible employee and who has the same rate of elective contributions.

The nonelective contribution requirement is satisfi ed if, under the terms of the plan, the employer is required to make a safe harbor nonelective contribution, on behalf of each nonhighly compensated employee who is an eligible employee, equal to at least 3 percent of the employee’s compensation.

Notice Requirement—The notice requirement is satisfi ed if each eligible employee for the plan year is given written notice of the employee’s rights and obligations under the plan and the notice satisfi es the content and the timing requirements.

The content requirement is satisfi ed if the notice (1) is suffi ciently accu-rate and comprehensive to inform the employee of the employee’s rights and obligations under the plan and (2) is written in a manner calculated to be understood by the average employee eligible to participate in the plan.8

8 A notice is not considered suffi ciently accurate and comprehensive unless it accurately describes (1) the safe harbor matching or nonelective contribution formula used under the plan (including a description of the levels of matching contributions, if any, available under the plan); (2) any other contributions under the plan (including the potential for discretion-ary matching contributions) and the conditions under which such contributions are made; (3) the plan to which safe harbor contributions will be made (if different than the plan containing the cash or deferral arrangement); (4) the type and amount of compensation that may be deferred under the plan; (5) how to make cash or deferred elections, including any


The timing requirement is satisfi ed if the notice is provided within a reasonable period before the beginning of the plan year (or, in the year an employee becomes eligible, within a reasonable period before the employee becomes eligible). The timing requirement is deemed to be satisfi ed if at least 30 days (and no more than 90 days) before the beginning of each plan year, the notice is given to each eligible employee for the plan year.

ACP Test Safe Harbor A defi ned contribution plan is treated as satisfying the ACP test with

respect to matching contributions for a plan year if, for the entire plan year:• Each nonhighly compensated employee eligible to receive an allocation of

matching contributions under the plan is also an eligible employee under a cash or deferred arrangement that satisfi es the ADP test safe harbor, and

• The plan satisfi es the matching contribution limitations.

A plan satisfi es the matching contribution limitations if:

• The plan satisfi es the matching contribution requirement using the basic matching formula and no other matching contributions are provided under the plan, or

• A plan satisfi es the matching contribution limitations if the plan satis-fi es the matching contribution requirement using an enhanced matching formula under which matching contributions are only made with respect to elective contributions that do not exceed 6 percent of the employee's compensation and no other matching contributions are provided under the plan.

In the case of any other plan, the matching contribution limitations are satisfi ed if, under the plan:• Matching contributions are not made with respect to employee contribu-

tions or elective contributions that in the aggregate exceed 6 percent of the employee's compensation,

• The rate of matching contributions does not increase as the rate of employee contributions or elective contributions increases, and

• At any rate of employee contributions or elective contributions, the rate of matching contributions that would apply with respect to any highly compensated employee who is an eligible employee is no greater than

administrative requirements that apply to such elections; (6) the periods available under the plan for making cash or deferred elections; and (7) withdrawal and vesting provisions applicable to contributions under the plan.


the rate of matching contributions that would apply with respect to a nonhighly compensated employee who is an eligible employee and who has the same rate of employee contributions or elective contributions.

ConclusionIn today’s mobile society, 401(k) arrangements can be particularly

effective in meeting retirement income needs among workers who change jobs frequently and workers with intermittent labor force participation. Employee elective contributions to the plans are fully and immediately vested. When employees terminate employment or change jobs, they can roll over the accumulated contributions and earnings of the plan to an individual retirement account (IRA) or another tax-qualifi ed plan. As a result, 401(k) arrangements may particularly benefi t young workers with high labor force mobility and women who leave the labor force for a protracted time. Sec. 401(k) arrangements are also used by employers as a way to provide supplemental retirement security for their employees without increasing overall retirement benefi t costs. This may be accomplished by supplementing the employer’s primary pension (often a defi ned benefi t) plan with a 401(k) arrangement that has little or no employer contribution.

BibliographyCopeland, Craig. “Ownership of Individual Retirement Accounts (IRAs)

and 401(k)-Type Plans.” EBRI Notes, no. 5 (Employee Benefi t Research Institute, May 2008): 2–12.

________. “Employment-Based Retirement Plan Participation: Geographic Differences and Trends, 2007.” EBRI Issue Brief, no. 322 (Employee Benefi t Research Institute, October 2008).

________. “Retirement Plan Participation: Survey of Income and Program Participation (SIPP) Data.” EBRI Notes, no. 9 (Employee Benefi t Research Institute, September 2005): 2–12.

Great-Western Retirement Services. 401(k) Answer Book. New York: Aspen Publishers, 2008.

Hewitt Associates LLC. Trends and Experience in 401(k) Plans. Lincolnshire, IL: Hewitt Associates LLC, 2007.

Holden, Sarah, and Jack VanDerhei. “The Role of 401(k) Accumulations in Future Retirement Income.” In David Blitzstein, Olivia S. Mitchell, and Stephen P. Utkus, eds., Restructuring Retirement Risks. Oxford


University Press USA for the Pension Research Council, The Wharton School, University of Pennsylvania, 2006, pp. 37–51.

________. “Tax Incentives, Plan Design, and Employee Responses: Funding Your Future In 401(K) Plans.” Proceedings of the Annual Conference on Taxation, 2005, pp. 303–12.

________. “The Infl uence of Automatic Enrollment, Catch-Up, and IRA Contributions on 401(k) Accumulations at Retirement.” EBRI Issue Brief, no. 283 and ICI Perspective (Employee Benefi t Research Institute and Investment Company Institute, July 2005).

Profi t Sharing/401(k) Council of America. 51st Annual Survey of Profi t Sharing and 401(k) Plans: Refl ecting 2007 Plan Year Experience. Chicago: Profi t Sharing/401(k) Council of America, 2008.

VanDerhei, Jack. “The Expected Impact of Automatic Escalation of 401(k) Contributions on Retirement Income.” EBRI Notes, no. 9 (Employee Benefi t Research Institute, September 2007): 2–8.

VanDerhei, Jack, and Craig Copeland. “The Impact of PPA on Retirement Savings for 401(k) Participants.” EBRI Issue Brief, no. 318 (Employee Benefi t Research Institute, June 2008).

VanDerhei, Jack, Sarah Holden, Craig Copeland, and Luis Alonso. “401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2006.” EBRI Issue Brief, no. 308 (Employee Benefi t Research Institute, August 2007).

Additional Information

American Benefi ts Council1501 M Street, NW, Suite 600Washington, DC 20005(202) 289-6700www.americanbenefi tscouncil.org

International Foundation of Employee Benefi t Plans18700 W. Bluemound RoadBrookfi eld, WI 53045(262) 786-6710www.ifebp.org


Pension Research CouncilThe Wharton School of the University of Pennsylvania3620 Locust Walk, 3000 Steinberg Hall — Dietrich HallPhiladelphia, PA 19104(215) 898-7620www.prc.wharton.upenn.edu/prc/prc.html

Profi t Sharing/401(k) Council of America20 N. Wacker Drive, Suite 3700Chicago, IL 60606(312) 419-1863www.psca.org

U.S. Department of LaborEmployee Benefi ts Security AdministrationFrances Perkins Building200 Constitution Avenue, NWWashington, DC 20212(866) 444-3272www.dol.gov/ebsa

Documents

Chapter 8: 401(k) Cash or Deferred Arrangements 79 deferred investment income and permitting ... Additional details can found in Chapter 7 of the 5th edition of Fundamentals ... (k)