January 17th, 2007 Survey Says Employers are Shortening 401k Waiting Periods
A survey conducted by the Profit Sharing/401k Council of America in Chicago reports that more and more US employers are shortening the length of time it takes for their employees to be eligible to contribute towards 401k retirement plans. About 427 401k retirement plans were surveyed and the reports showed 69% of them permit employees to contribute towards 401k retirement plans within 3 months of hire date. This is a 4% increase from the last year, that showed only 65%.
Medium to large sized 401k plans (1000 employees or more) showed that 85% of them offer eligibility within 3 months, up from 79% last year. PSCA President David Wray quotes, "Shorter eligibility periods are good news for workers."
This shortening of eligibility means employees will be able to contribute towards a 401k plan much faster when leaving their former employers, and transferring to a new workplace. Furthermore, as more companies shut down defined benefit plans, shortening the waiting period for 401k contributions is a good bet for the employees.