Summary Plan Data” EBRI Issue Brief #174, June 1996. Mr One of the assumptions made above was that employees who did not actually subject themselves to market risk Determining the employer . Chairman and members of the Committee. I am Dallas L. Salisbury ’s retroactive obligation to the misclassified employee under the defined contribution , President and CEO of the Employee option with the highest earnings rate for a particular year (emphasis added), so long as most of the Table2 7 In a recent court case (Garcia v. U.S., DC DC, No. 97-1698, 3/9/98) workers alleged they suffered additional Allocation Distributions of Participant Contributions, Company B Retirement Savings Plan, 1994 (since the hypothetical employer did not allow them into the defined contribution plan) would actually be re- Benefit Research Institute (EBRI), a nonprofit research and education organization located in W plan requires several assumptions. In each case, the “correct” assumption will likely depend on the interpretation ashington, DC. participants receiving a corrective allocation are non-HCEs. losses in that they were deprived of the “right to plan intelligently for retirement.” Had they been correctly Nonequity Investments Equity Investments warded with some type of market-related rate of return that included at least a portion of the rate of return of equity EBRI does not lobby . , advocate policy positions, and in the past two years has not had any contracts with the I was asked to provide information today on private-sector practices in the pension area, as it relates to the placed in FERS when they should have been, they said, they would have made greater contributions to the Zero <20% 20%–80% 80%+ Zero <20% 20%–80% 80%+ proposals before the Committee in S.1710. Thrift Savings Plan (TSP). available through equities. There are those who might take exception to rewarding employees for what in essence government. Thank you for the opportunity to testify today. EBRI had the pleasure of sponsoring a series of Although we have no way of identifying cases in which a sponsor of a private plan has voluntarily performed the EBRI Total 12.3% 8.6% 47.4% 31.7% 25.4% 7.1% 47.8% 19.7% 8 Of course, this is offset by the fact that other employees receive more than they otherwise would have received if Age was a risk-free investment (ex post). In fact, in a recent case involving the purchase of a series of Executive Life The nonelective contribution to the employee is probably the easiest element to agree on. Since this amount would forums with this Committee in the early 1980s as it did its initial work that led to creation of the Federal Employ- EMPLOYEE three actions above, there have been other documented cases in which some sponsors have used corporate assets they had been given the choice of how much (if any) of their compensation they would contribute. 20–29 15.2 11.2 47.9 25.7 19.8 7.4 48.5 24.3 • The first set of questions upon which I was asked to comment dealt with a private plan sponsor BENEFIT ’s ability to 12 30–39 13.0 10.6 50.7 25.6 20.0 6.5 51.5 22.0 9 have been accumulated in the employee’ ees’ GICs by Unisys Retirement System (FERS). In addition to my testimony today for its 401(k) plans, the finance professor used as the damages expert for the plaintiffs testified s account but for the misclassification (regardless of his or her own , I ask that the two EBRI Issue Briefs submitted to provide additional contributions to participants who have been potentially impacted by the misfortunes of T-113 The potential impact of not making this assumption is explored below. simultaneously (1) pay employer catch-up contributions, (2) pay employee catch-up contributions and (3) RESEARCH 40–49 12.3 9.0 47.1 31.6 24.9 7.5 47.5 20.2 10 50–59 11.6 5.0 45.5 38.0 31.7 6.7 45.5 16.1 Paul J. Yakoboski and Jack L. VanDerhei, “Worker Investment Decisions: An Analysis of Large 401(k) Plan assume that these contributions had been invested in a diversified portfolio, including, equities, to account for that he adopted the triple-A Solomon Brothers bond index to determine the damages owed to participants after to the Subcommittee be entered into the record. contribution behavior), it is difficult to construct an argument under which it would not be equitable for this to be INSTITUTE ® insurance companies that had issued guaranteed investment contracts (GICs) to the sponsors’ defined contribu- 60 and over 4.8 0.5 31.4 63.3 55.2 8.1 31.4 5.2 “lost” investment earnings. Although certain participant-specific and planwide constraints may limit the Data” EBRI Issue Brief no.176, Employee Benefit Research Institute, August 1996. the expiration of the contracts, without having made actual inquiry into the participants’ investment strategies a requirement for the employer. tion plan. Although these were voluntary events, it should be noted that class-action suits had already been filed Salary 11 extent to which a private sponsor can engage in this behavior, it does not appear that the sponsor is prohibited EBRI has undertaken a collaborative effort with the Investment Company Institute to attempt to scientifically $10,000–$19,999 18.1 8.1 40.0 33.7 30.4 4.1 39.6 25.9 from making such contributions. We have not been able to identify data, however, on when it has occurred, as and propensities. Even though some class representatives put the money return from Executive Life into equity I was asked to provide information today on private-sector practices in the pension area, as it relates to the $20,000–$29,999 10.9 5.6 46.4 37.2 32.2 6.1 46.5 15.2 against at least one other plan sponsor holding an Executive Life GIC in 1991. Therefore, these events may not analyze the asset allocation, contribution, participation, and loan and withdrawal decisions of 401(k) partici- $30,000–$39,999 11.1 8.1 46.5 34.3 27.7 7.8 46.1 18.4 it is not a common practice. pants. A forthcoming joint publication will focus on participant level data from more than 30,000 401(k) plans. $40,000–$49,999 13.5 9.9 46.7 29.9 22.9 7.8 47.6 21.7 investments, the alleged damages were computed based on assumptions much closer to a risk-free rate of return. proposals before the Committee in S.1710. The matching rate for the employer is also fairly easy to agree on; however, should it be assumed that the em- appear “extreme” to other private employers. 12 $50,000–$59,999 11.7 8.0 51.0 29.3 22.0 7.6 51.5 18.8 In re Unisys Savings Plan Litigation, DC E.Pa, No. 91-3067, 11/24/97. • The second set of questions dealt with the issue that some federal employees were given a chance to switch $60,000–$74,999 15.4 9.7 51.5 23.4 17.5 6.4 52.8 23.2 In other words, if there appears—to at least some professionals—to be a basis for adopting a 100 percent bond rate ployee would necessarily have contributed a sufficient amount of his or her compensation to receive the maximum $75,000–$99,999 15.1 15.4 44.5 25.0 18.0 7.4 46.0 28.7 plans in the past and did not. There is now discussion that the government may reopen the opportunity since 6 $100,000 or more 7.8 10.8 50.0 31.5 23.4 8.1 51.1 17.5 of return in a situation where the participant’ The fact that we are not permitted to take a position on pending legislation constrains, to a certain degree, the match? EBRI studies of the 401(k) market suggest that while many employees contribute just enough to maxi- s actual asset allocation decisions are available, then certainly some The second set of questions dealt with the issue that some federal employees were given a chance to switch plans the markets have done so well. I am not personally aware of private plan sponsors that provide this type of Senate Committee on Governmental Affairs Tenure flexibility and given the various regulatory constraints detailed in my full submission, qualification of such an may feel that in those cases where there are no observed investment choices for employees that were misclassified, type of testimony I am able to provide in this matter mize the employer’s match, a significant percentage of eligible employees contribute less than that amount (if . However, I hope to be of assistance to the committee by in the past and did not, and there is now discussion that the government may reopen the opportunity since the 2 years or less 27.4 12.8 40.9 18.9 16.1 3.0 41.5 39.3 approach may prove to be problematic. Given the ability this would present for employees to in essence 2+ years–5 years 16.8 10.6 46.2 26.4 21.1 6.3 47.1 25.5 4 the rationale for an all-bond rate of return would be even stronger anything at all). Unfortunately framing some of the issues in terms of their private-sector analogy Subcommittee on International Security , this leaves policymakers with the Solomonesque decision of either (1) ensuring , Proliferation, and Federal Services .. Although we need to be mindful of the differ- markets have done so well. I am not personally aware of private plan sponsors that provide this type of flexibility 5+ years–10 years 11.0 9.0 50.2 29.8 23.9 6.8 50.6 18.6 exercise a financial option against their employers, I believe it is fair to characterize this as a plan design that 10+ years–15 years 9.2 8.5 50.0 32.3 24.8 8.4 50.4 16.4 would be considered quite “extreme” by private employers. Table 1 that no employee receives less of a match than they would have received had they contributed a sufficient amount ent environments and constraints under which these plans operate, the various ways in which employers may 15+ years–25 years 7.8 6.4 49.2 36.6 28.4 8.7 49.4 13.4 and given the various regulatory constraints alluded to above, qualification of such an approach may prove to be Allocation Distributions of Participant Account Balances, Company A Retirement Savings Plan, 1994 Over 25 years 7.2 4.8 41.1 46.9 40.5 7.2 40.9 11.4 7 In conclusion, let me restate that we have attempted to respond to the request for analysis, albeit in a philosophi- respond to competing objectives may be of use in future deliberations with respect to this legislation. to ensure the maximum match (in which case the employer pays more than it would have expected to contribute) problematic. Given the ability this would present for employees to, in essence, exercise a financial option against • The first element that needs to be considered is what happens to the benefit accrued under the defined benefit Gender Nonequity Investments Equity Investments Company A Stock plan employees were thought to have been participating in. If it is decided that they have a legal claim to Male 15.9 11.3 45.6 27.2 21.7 6.0 46.9 25.4 Hearing on Proposals to Correct Federal Retirement Coverage Errors cal as opposed to an empirical mode. W or (2) having the employer provide matching contributions based on some average contribution rate (presumably e do not take positions on any of it or make legislative action recommenda- their employers, I believe it is fair to characterize this as a plan design that would be considered quite “extreme” Zero <20% 20%–80% 80%+ Zero <20% 20%–80% 80%+ Zero <20% 20%–80% 80%+ Female 9.9 6.7 48.6 34.8 28.1 7.8 48.4 15.7 such a benefit, then the increased value of this benefit vis-à-vis the smaller value under the defined benefit Total Marital Status 15.4% 12.8% 42.5% 29.3% 20.9% 13.5% 44.6% 21.1% 77.4% 11.8% 8.6% 2.1% tions. However The first set of questions on which I was asked to comment dealt with a private plan sponsor determined from those employees that were correctly classified) with the result that some employees would likely plan for new hires should be deducted from the gross claim that is determined under the defined contribution , the database mentioned above would put us in the unique position to assist the Committee if they ’s ability to simulta- by private employers. Single 11.5 8.8 47.6 32.2 25.5 7.8 47.6 19.2 plans. If it is decided that the claim does not exist since they were never participants, then no further action is Age 8 Married 13.0 8.9 47.4 30.7 24.9 6.5 48.1 20.5 choose to provide a more refined analysis of the participants’ likely asset allocation during this time had they been neously (1) pay employer catch-up contributions; (2) pay employee catch-up contributions; and (3) assume that the end up with a smaller match than they otherwise would have had. 20–29 19.6 16.3 44.4 19.7 16.9 7.4 48.7 27.0 71.7 16.3 10.1 1.9 needed to net out this value. Unknown 10.3 3.8 45.1 40.8 32.4 9.4 44.6 13.6 30–39 15.2 14.0 45.0 25.8 18.3 12.1 47.8 21.7 76.4 12.9 8.7 2.0 by given the opportunity to invest their own contributions and those of the employer contributions had been invested in a diversified portfolio, including, equities, which included all “lost” investment . Thank you for allowing me the The question as to what the employer Race ’s equitable response should be in such a situation still remains unanswered. 40–49 14.7 11.7 41.2 32.5 23.2 14.6 42.6 19.5 78.8 10.8 8.2 2.3 Dallas L. Salisbury 50–59White 16.3 13.9 11.3 9.2 38.9 33.6 47.7 22.7 29.2 16.6 40.0 23.7 20.7 6.3 79.0 48.3 10.1 8.6 21.7 2.3 • Determining the employer’s retroactive obligation to the misclassified employee under the defined contribu- 1 2 opportunity to testify today earnings. Perhaps the most complicated assumption in this determination would be the participant’ Although certain participant-specific Nonwhite . 7.2 6.6 and planwide 46.2 40.0 constraints may limit the extent to which a private 31.1 9.7 s asset allocation. If one 46.0 13.2 I would like to abstract from the constraints imposed on private sponsors for a few minutes and consider how 60 and over 14.2 9.1 32.3 44.4 33.1 16.0 32.0 18.9 86.2 5.7 6.2 1.9 President and CEO tion plan requires several assumptions. In each case, the “correct” assumption will likely depend on the Salary 9 Source: Employee Benefit Research Institute. interpretation of equity. sponsor can engage in this behavior were to assume the employee should be rewarded for risk that was not actually taken (since investments were , it does not appear that the sponsor is prohibited from making such contribu- competing objectives might be satisfied. $10,000–$19,999 10.6 6.0 34.3 49.1 40.8 13.6 34.3 11.3 78.1 12.8 6.5 2.5 $20,000–$29,999 9.2 7.4 33.9 49.5 41.2 13.1 33.8 11.8 82.3 9.4 6.5 1.8 3 tions. In fact, the Reish & Luftman law firm not actually made), presumably the employer can rely on the actual historical fund performances to determine the specifically provides the following commentary for a hypothetical • The nonelective contribution to the employees is probably the easiest element to agree on. Since this amount $30,000–$39,999 12.2 10.6 38.9 38.3 28.7 14.4 40.2 16.6 79.1 11.4 7.4 2.1 Employee Benefit Research Institute $40,000–$49,999 15.5 13.0 43.5 28.0 19.4 13.7 45.7 21.1 76.6 12.7 8.6 2.2 Endnotes would have been accumulated in the employee’s account but for the misclassification (regardless of his or her rate of return for each component; however situation in which the sponsor of a profit-sharing plan under which employer contributions are geared to partici- , the total investment income would be based to a large extent on how For simplicity, let me assume that we have an employer that was once sponsoring only a contributory defined 2121 K Street NW, Suite 600 $50,000–$59,999 17.1 14.1 44.7 24.1 T16.5 able3 12.7 47.3 23.6 76.6 12.4 8.7 2.2 1 Annual limits on additions to defined contribution plans in general and elective contributions specifically are set own contribution behavior), it is difficult to construct an argument under which it would not be equitable for $60,000–$74,999 Allocation Distributions of P 17.3 14.6 articip 45.3 ant A 22.8 ccount Bal 14.8 ances, Comp 13.0 48.1 any C Retirement S 24.1 76.3 avings Pl 12.0 an, 1994 9.6 2.1 Washington, DC 20037 aggressively the participant would have invested his or her defined contribution balances. T pant compensation provides incorrect contributions due to data entry errors: o attribute an average benefit plan and that the participants were not included in Social Security. Further, assume that the generosity of $75,000–$99,999 18.4 14.7 44.4 22.4 14.0 13.8 47.3 24.9 76.3 11.9 9.7 2.1 this to be a requirement for the employer. forth in Internal Revenue Code (IRC) Sections 415(c) and 402(g), respectively Voice: 202/775-6322 $100,000 or more 19.9 14.2 44.2 21.6 14.2 13.3 47.2 25.3 76.0 11.2 10.3 2.5 Equities Nonequities Employer Stock 2 asset allocation to participants would create both winners and losers. Based on data that EBRI has developed, the IRC Section 401(a)(4) makes it problematic to have a contribution scheme that provides a higher percentage of One alternative would be for the plan to be “readministered” in accordance with its terms. That is, the the defined benefit plan has been significantly reduced for participants hired after some threshold date, but that Fax: 202/775-6312 Tenure • The matching rate for the employer is also fairly easy to agree on; however Zero <20% 20%–80% 80%+ Zero <20% 20%–80% 80%+ , should it be assumed that the Zero <20% 20%–80% 80%+ compensation for “highly compensated employees.” In general, these are employees earning in excess of 2 years or less 24.0 10.4 28.0 37.6 39.0 4.1 33.9 23.1 73.3 11.1 13.2 2.5 10 Internet: http://www.ebri.org range of actual allocations is very broad. contribution, plus the amount which had been earned on those contributions, would be reallocated among Depending on the sponsor studied, between 20 percent and 37 percent their combined contribution to Social Security and the new defined benefit plan is exactly the same as it was employee would necessarily have contributed a sufficient amount of his or her compensation to receive the Total 2+ years–5 years 37.0% 23.2 11.3% 16.441.6% 40.6 10.1% 19.8 45.0% 19.4 11.4% 6.7 31.9% 45.7 28.3 11.6% 68.6 19.9% 15.810.4% 12.2 49.8%3.4 19.9% $80,000, although specific guidance may be found in IRC Section 414(q). It should be noted that certain types of maximum match? 5+ years–10 years 18.2 15.0 46.1 20.7 16.2 9.3 49.7 24.9 74.3 14.3 9.3 2.1 of participants put no money into equities, between 10 percent and 21 percent put all of the 401(k) money into the participant accounts to reflect the correct compensation. under the previous arrangement. Age As a quid pro quo, the sponsor has decided to set up a participant-directed private defined contribution plans may provide for a limited amount of disparity between the contribution rates 10+ years–15 years 13.4 13.0 44.2 29.3 20.1 13.8 46.2 19.9 78.9 11.6 7.5 2.0 20–29 28.1 6.8 51.2 13.8 57.2 10.7 25.9 6.2 17.2 9.2 57.2 16.4 15+ years–25 years 13.5 11.8 41.7 33.0 22.5 15.6 43.1 18.9 79.2 10.9 8.0 1.9 equities, and the remaining participants are spread across a range, as shown by tables 1–3. It is important to 30–39 of highly compensated employees and their lower paid counterparts as long as it does not exceed the limitations 34.0 10.7 44.7 10.7 44.8 12.4 32.5 10.3 18.7 10.8 53.2 17.3 defined contribution plan with two components: a first part consisting of a nonelective employer contribution that • Perhaps the most complicated assumption in this determination would be the participant’s asset allocation. If Over 25 years 16.3 11.5 40.3 31.9 20.9 16.9 41.4 20.8 78.1 10.7 9.0 2.3 40–49 40.2 11.7 38.7 9.4 44.4 11.6 31.4 12.5 20.2 9.8 48.0 22.0 one were to assume the employee should be rewarded for risk that was not actually taken (since investments specified in IRC Section 401(l). Gender 50–59 39.4 13.6 38.0 9.0 41.8 9.8 34.1 14.2 22.6 11.0 44.6 21.8 note, however The other approach would be for the employer to make an additional contribution to the plan so that, , that these aggregate percentages mask significant age, gender, wage and tenure effects. They also will be contributed for all newly hired employees and a second part that matches the employee’s contribution up to 3 were not actually made), presumably the employer can rely on the actual historical fund performances to Male 16.5 13.4 42.2 27.8 20.0 13.6 44.7 21.6 75.6 12.1 9.8 2.6 60 and over 41.6 15.3 34.5 8.6 32.1 8.2 40.4 19.2 28.8 13.8 40.7 16.7 Fred Reish, Bruce Ashton, and Nick White, “Misallocations Resulting From Calculation Errors” Q&A: Plan May 13, 1998 Female 12.7 11.2 43.1 32.9 22.9 13.1 44.3 19.6 82.1 11.2 5.6 1.1 mask important investment menu impacts as well as strong influences from the participant direction (or lack determine the rate of return for each component; however based on the correct compensation data, each participant would have a contribution equal to the same , the total investment income would be based to a some specified percentage of compensation. Finally, as a result of some type of clerical error, assume that some Salary Defects. URL:http://www.benefitslink.com/benefits-bin/qa.cgi?mode=list&database=qa_plandefects (23 March Marital Status $10,000–$19,999 large extent on how aggressively the participant would have invested his or her defined contribution balances. 29.3 6.5 39.9 24.3 61.6 10.5 22.3 5.6 23.6 11.4 48.4 16.6 11 thereof) of matching employer contributions. 1998)percentage of pay. In this case, the employer would also need to add earnings to the contribution. employees hired after the threshold date had mistakenly been told they were in the defined benefit plan (and thus $20,000–$29,999 Single 39.1 15.3 5.2 12.739.8 42.3 15.9 29.7 56.5 22.1 7.7 12.1 25.0 44.6 21.3 10.9 23.2 77.9 12.3 9.7 7.9 47.2 2.0 19.9 To attribute an average asset allocation to participants would create both winners and losers. Based upon Married 15.5 12.9 42.6 29.1 20.5 13.9 44.7 21.0 77.3 11.8 8.8 2.2 4 $30,000–$39,999 47.3 8.7 34.0 9.9 45.0 8.6 30.3 16.1 23.2 8.6 46.9 21.3 Note, however, that university plans may provide some type of initial choice for the participants. For example, data that EBRI has developed, the range of actual allocations is very broad. did not make any contributions to the defined contribution plan, whether or not they would have made them if $40,000–$49,999 Unknown 44.4 12.4 9.8 9.436.8 36.6 9.0 41.6 45.7 30.6 9.6 15.4 31.2 36.6 17.5 13.5 20.4 82.1 9.7 8.4 6.7 49.3 1.6 21.9 Robert L. Clark, Loretta Harper, and M. Melinda Pitts recently authored an article in TIAA-CREF’s Research $50,000–$59,999 41.6 11.5 37.9 9.0 46.0 11.0 31.0 11.9 18.4 9.3 49.6 22.7 Race Once the decision for the correct asset allocation assumption is made, there will likely be little disagreement on its They point out that Revenue Procedure 98-22 contains a number of principles applicable to the correction of a they had been assigned to the correct plan). $60,000–$74,999 34.1 12.5 43.6 9.8 45.2 12.4 31.7 10.6 18.3 10.9 51.1 19.7 • Dialogues Once the decision for the correct asset allocation assumption is made, there will likely be little disagreement White (Issue Number 50, March 1997) titled “Faculty Pension Choices in a Public Institution: Defined 15.7 12.9 42.6 28.8 20.2 13.5 44.8 21.4 77.9 11.6 8.5 2.1 $75,000–$99,999 28.1 12.3 48.4 11.2 42.6 13.3 34.0 10.0 20.3 12.4 51.4 15.9 Nonwhite 14.4 12.2 41.8 31.6 24.0 13.2 43.5 19.2 75.4 13.3 9.0 2.3 on its application to assets that would have been generated from nonelective contributions and matching application to assets that would have been generated from nonelective contributions and matching contributions. misallocation for private plan sponsors. W $100,000 or more Benefit and Defined Contribution Plans” in which they found, for the most part, academic institutions can be 21.0 11.7 54.3 ith respect to question 3 above, they specifically make the following two 13.0 37.3 13.4 38.8 10.4 27.9 14.9 46.2 11.0 contributions. However Source: Employee Benefit Research Institute , the equitable treatment of investment income for employee contributions is likely to . Tenure divided into three groups with respect to the primary retirement plans offered employees: (1) private institu- However points: , the equitable treatment of investment income for employee contributions is likely to be more problem- The first element that needs to be considered is what happens to the benefit accrued under the defined benefit 2 y be more problematic. ears or less 21.3 2.6 54.2 21.9 71.7 6.3 18.8 3.2 22.1 8.8 53.2 15.9 tions that require newly hired faculty to enroll in a defined contribution pension plan; (2) public institutions 2+ years–5 years 26.4 6.6 53.1 13.9 59.1 10.4 25.2 5.3 18.1 7.8 56.5 17.6 atic. On one hand, employees can argue that they would have earned investment income on the contributions they Corrective allocations should be based on the terms of the plan at the time of the error and should be plan the employees were thought to have been participating in. If it is decided that they have a legal claim to such 5+ years–10 years 33.2 10.2 45.6 10.9 43.7 12.7 33.3 10.3 19.3 10.9 53.8 16.0 that require faculty to enroll in a defined benefit pension plan sponsored by a state or local government; and 10+ years–15 years 36.2 12.7 41.9 9.2 40.1 12.2 35.3 12.3 19.2 11.5 52.0 17.3 made (if any) but, at the same time, the employer can correctly make the case that, since the employees did not (3) public institutions that give newly hired faculty a choice of enrolling in a public retirement plan or one of adjusted for earnings and forfeitures that would have been allocated if the failure had not occurred. The a benefit, then the increased value of this benefit vis-à-vis the smaller value under the defined benefit plan for 15+ years–25 years 42.2 12.3 37.1 8.4 43.2 11.9 31.6 13.3 19.5 10.2 47.4 22.9 Over 25 years 41.7 13.0 36.3 8.9 43.7 10.0 32.3 14.0 22.4 10.1 43.3 24.2 several defined contribution plans approved by the institution. 5 actually have to contribute these funds to the plan in the intervening years, they had the opportunity to earn Revenue Procedure states that “corrective allocations need not be adjusted for losses.” new hires should be deducted from the gross claim that is determined under the defined contribution plans. If it The views expressed in this statement are solely those of the author and should not be attributed to the Gender 5 This assumes that the claim under the defined contribution plan is larger than that under the defined benefit Employee Benefit Research Institute, or the EBRI Education and Research Fund, its officers, trustees, Male 37.3 11.3 41.2 10.2 47.1 11.1 30.5 11.3 20.2 10.1 47.9 21.8 investment income outside of the plan. Mitigating this argument to some extent is the fact that the participants is decided that the claim does not exist since they were never participants then no further action is needed to net F plan (a high probability event under some of the scenarios below given the recent performance in the financial emale 36.5 11.2 42.3 10.0 41.5 11.9 34.3 12.1 19.5 10.8 53.2 16.5 sponsors, or other staff, or to the EBRI-ERF American Savings Education Council. The Employee Benefit have been denied the ability to benefit from the tax-advantaged treatment of the plan’ Race markets). If this is not the case, the employee may simply be given the opportunity to take whichever benefit is Where a plan permits participant-directed investments, rather than calculating the actual earnings for s trust during this time. Research Institute is a nonprofit, nonpartisan, public policy research organization which does not lobby or out this value. White 36.4 11.4 41.7 10.6 45.5 11.4 31.5 11.6 20.4 10.5 49.1 20.0 take positions on legislative proposals. greater: that already earned under the defined benefit plan or that which would have been accumulated under Nonwhite 39.7 10.8 41.3 8.2 42.8 11.8 33.7 11.6 17.7 9.6 53.1 19.6 each participant based on his or her actual investment mix, it is permissible to use the investment the defined contribution plan. Source: Employee Benefit Research Institute. 6 Paul J. Yakoboski and Jack L. VanDerhei, “Contribution Rates and Plan Features: An Analysis of Large 401(k) 2 1 3 6 5 4