Benchmarking - Waiting Period for 401(k) Plans

[Guest AnnB]

I was wondering if anyone knew of any survey data that showed typical waiting periods for 401(k) programs. We are a manufacturing company with about 800 employees and I want to decrease our waiting period and need some facts to support. Thanks for any help.

[Guest Kerry]

I assume that a match is involved. In our plan (no match-only employee contributions) as long as you're 18, actively employed and breathing, you're eligible. In fact, you might want to consider "negative elections", i.e. you're in at a minimal % in a "safe" fund, unless you tell us otherwise. We implemented the negative election and it has proven worthwhile in building and maintaining enrollment.

[LCARUSI]

I would suspect you have high turnover among short service hourly employees in a manufacturing environment. For that reason, you might want to reconsider your plan to shorten the waiting period.

Administratively, you don't want to deal with all those small cashouts

[Guest robin s vatalaro]

I have also found in high turnover manufacturing environments that unless using negative elections is considered, I end up w/ a large number of people eligible who would never become eligible under a 12 month wait requirement. And a lot of these people that become eligible because of generous eligibility requirements don't defer. Which really dilutes the NHCE ADP%.

This can be mitigated by disaggregating the ADP test for non-statutory eligiblity, but I have found disaggregating to be pretty onerous depending on which administration software package you are using. Also if you end up w/ an HCE in your disaggregated group, that particular HCE is often hurt by the normally very low NHCE ADP% of the disaggregated group. Just some thoughts.