Participants value the investment opportunity that 401(k) plans represent and are largely opposed to changing the tax preferences or investment control in those accounts, a new survey finds.
Nearly 9 in 10 individuals (89%) who expressed an opinion had favorable impressions of 401(k) plans, with 43% expressing a “very favorable” impression, according to the Investment Company Institute’s American Views on Defined Contribution Plan Saving, 2021.
Similarly, 9 out of 10 DC-owning individuals agreed that their plans helped them think about the long term and made it easier to save, while 45% of DC-owning individuals indicated that they probably would not be saving for retirement if not for their DC plans.
What’s more, 88% of respondents disagreed that the government should take away the tax advantages of DC accounts, and 89% disagreed with reducing the amount that individuals can contribute to DC accounts.
“Americans valued current plan design features, and their views on policy changes revealed a strong preference for preserving retirement account features and flexibility. This was especially true for individuals who use the plans and for those most in need of them to supplement Social Security,” write the ICI’s Sarah Holden, Daniel Schrass, Michael Bogdan and Jason Seligman.
And support for the tax treatment of DC accounts was widespread even among individuals whose households did not own DC accounts or IRAs. In this case, 8 out of 10 individuals without DC accounts or IRAs rejected the idea of taking away the tax treatment of DC accounts.
The report is ICI’s 14th in the series, which summarizes results from a nationally representative survey of more than 2,000 American adults collected during November and December 2021. The survey—which polled respondents about their views on DC plans, and their confidence in 401(k) and other DC plan accounts—was developed by ICI and administered by NORC at the University of Chicago using the AmeriSpeak probability-based panel.
DC Plan Investments
Additional findings show that nearly all DC-owning individuals agreed that it was important to have choice in, and control of, the investments in their DC plans. Overall, 85% of respondents indicated that their DC plan offered a good lineup of investment options.
The ICI notes that satisfaction with the lineup of investment options was high across all age and household income groups, although it was somewhat higher for DC-owning individuals with household incomes of $100,000 or more (88%) and somewhat lower for DC-owning individuals with household incomes of less than $30,000 (70%).
In addition, 87% of individuals surveyed disagreed with the idea of not allowing individuals to make investment decisions in their DC accounts. Most respondents (80%) also opposed proposals to require a portion of retirement accounts to be converted into a fair contract promising them income for life from either the government or an insurance company.
Goal-making Confidence
The survey also asked respondents to indicate their confidence in the ability of the 401(k) system to help individuals meet their retirement goals. Notwithstanding whether their households had retirement accounts, 78% of Americans indicated that they were either “somewhat” or “very” confident that 401(k) and other employer-sponsored retirement plan accounts can help people meet their retirement goals. This was similar to the confidence levels expressed in prior years.
That confidence was higher among individuals whose households currently owned DC accounts or IRAs (84%), but a solid majority of non-owners (61%) expressed confidence in the retirement plan account approach.
