Data & Research April 2, 2013

29% Chose Deferral Higher Than Default

Five percent of Section 401(k) plans include an automatic contribution arrangement (ACA), according to the Internal Revenue Service (IRS) 401(k) Compliance Questionnaire.
 
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Large and very large plans are more likely than small or medium ones to have an automatic contribution arrangement.    

According to the IRS’s final report of responses from its Questionnaire, 43% of participants subject to an ACA deferred at the default rate, while 29% elected a rate higher than the default rate.Twenty-one percent elected not to make elective deferrals, and 7% elected a rate less than the default rate.  

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The final report of responses from the IRS 401(k) Compliance Check Questionnaire includes results from the Interim Report. (See “IRS Issues Interim Report about 401(k) Compliance Questionnaire.”)That report projected 401(k) Questionnaire findings to the Section 401(k) plan sponsor population that files Form 5500.  

The final report also includes: 

  • Additional analysis of the 401(k) Questionnaire not included in the Interim Report; 
  • A new section about Automatic Contribution Arrangements;  
  • Stratified data highlighting differences in the results based on plan size; and 
  • Updates to the data included in the Interim Report to address questions from the retirement plan community. 

The final report is here.

Products April 2, 2013

JPM Funds Releases 2Q Markets Guide

The J.P. Morgan Funds Guide to the Markets for the second quarter of 2013 has been released.
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The guide is a resource for financial advisers and investors to help break down the state of the markets and economy. It is also useful for investors to understand the drivers of recent market performance, as well as some of the issues which will impact returns going forward.

Entering 2013, financial markets faced significant challenges including a slumping European economy, concerns about inflation in some emerging markets and fiscal drag in the U.S. from tax increases and spending cuts.

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Despite this, equity markets had a remarkably strong quarter, with major stock market indices hitting all-time highs in a full recovery from the 2007-2009 bear market. Fixed-income markets, however, saw more mixed performance as investors moved cash toward risk assets.

This quarter’s guide addresses topics such as:

  • How a surge in household wealth is offsetting some of the impacts of fiscal drag;
  • Potential stock market returns starting from higher valuations ;
  • Implications of Federal Reserve policy for inflation, bonds and equities;
  • The contrast between aggressive fiscal and monetary stimulus in Japan and austerity in Europe; and
  • Risks and opportunities in emerging markets.

The guide is available here.

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