The State of Defined Contribution Retirement Plans in 2021

The number of organizations offering defined contribution (DC) retirement plans has increased over the past two years, making them the primary retirement vehicle for an increasing share of the U.S. workforce.

The International Foundation’s 2020 Employee Benefits Survey showed that 87% of responding organizations offer a DC plan, while 40% have a defined benefit (DB) plan. DB plans are still common among multiemployer (93%) and public (83%) plan respondents but are becoming increasingly rare in corporate/single employer scenarios (19%).

The 2020 Employee Benefits Survey captured benchmarking data on these DC plans, including specifics on plan types offered, loan and hardship withdrawal provisions, plan matching contributions, automatic and simplified investment features, participation/contribution rates and financial/retirement planning benefits.

Here is an overview of this new data.

The State of Defined Contribution Retirement Plans in 2021

Plan Offerings

  • The most commonly available plan types are 401(k) plans (76%) followed by Roth 401(k) plans (46%).
  • A similar proportion of responding organizations offer profit-sharing plans (19%), Section 457 plans (14%), and 403(b) plans, offered by 13% of organizations.

Loan and Hardship Withdrawal Provisions

  • More than three in four (76%) allow loans through their 401(k) plans, while 10% allow them through a 403(b) plan. More than one in seven (15%) do not allow loans in their DC plans. Responding organizations estimate that 14% of their 401(k) plan participants have used the loan provision.
  • Respondents estimate that a smaller proportion (7%) have used the loan provisions in applicable 403(b) plans.
  • About four in five (78%) respondents who offer a DC plan allow hardship withdrawals from their 401(k) plans, while 14% who offer 403(b) plans allow them.
  • Responding organizations that allow hardship withdrawals estimate that about 5% of their plan participants, on average, have used the provision for their 401(k) plans, while 3% have used the provision in their 403(b) plans.
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Matching Contributions

  • More than three in four respondents (76%) provide matching contributions in their DC plans.
  • These contributions are typically made on a fixed basis (72%) but are often discretionary (16%) or graded (13%) in nature.

Automatic Features

  • About three in five plans (58%) use automatic enrollment, in which the employer signs up every eligible employee for a plan unless the employee opts out during the enrollment period.
  • Plans that employ automatic enrollment set a default income deferral rate for participants. The most typically used rates are 3% of pay (36%), followed by 6% (21%) and 5% (16%). Organizations use different frequencies in automatically enrolling their participants. Seven in eight respondents (91%) enroll participants when first eligible, while 8% do so on an annual basis.
  • Going further, once enrolled, 27% of organizations are using automatic escalation to overcome a participant’s tendency to remain at a default contribution level.
  • Organizations employing automatic escalation overwhelmingly use a 1% default increase per period. To limit automatic escalation levels, responding organizations set caps, most commonly 10% (35%), 6% (19%) and 15% (10%) of pay.

Simplified Investment Features

  • Target-retirement-date/lifestyle funds are offered by more than four in five (83%) responding organizations.
  • Managed accounts are also common, offered by 39% of responding DC plans.
  • More than one in three (38%) responding organizations use automatic portfolio balancing.
  • Organizations also commonly offer self-directed brokerage accounts (26%), and target-risk/lifestyle funds (25%).

Final Distribution Options

  • More than four in five (81%) have a lump-sum distribution option, while five in nine (56%) offer installment payments, most frequently multiemployer plan (70%) and public employer (67%) plan respondents.
  • An annuity option is available from 32% of responding organizations, most commonly among multiemployer plan respondents (52%).

Participation/Contribution Rates

  • Respondents reported on the approximate activity levels of individuals within their DC plans. On average, 77% of responding organizations’ eligible participants participate in their DC plans, with higher proportions among multiemployer (79%) and corporate/single employer plans (79%).
  •  Survey respondents estimate an average deferral/contribution rate of 6.4%, with higher contributions among corporate and public employer respondents.

Financial/Retirement Planning Benefits

  • More than one-half (56%) of plan sponsors offer retirement calculators, a benefit more common among corporate and public sector respondents.
  • A similar proportion of respondents (56%) offer education initiatives to enhance worker understanding of retirement and financial issues. One half (50%) offers communication initiatives geared toward increasing worker participation in plans.
  • Slightly less than half of responding organizations (47%) make formal retirement planning/counseling services available.
  • A smaller proportion (40%) provides financial planning/counseling services.
  • About three in ten responding organizations (29%) engage in targeted communication about retirement/finances to different generations in the workforce, while a similar proportion target their communication around different live events (26%).

Related Reading: The Multiemployer Retirement Plan Landscape: 10 DC Plan Takeaways


Defined contribution plans are more popular than ever as a retirement-saving vehicle for American employees. Does your organization offer a DC plan? If so, what benefits do you value in your plan?

Download the full report: Employee Benefits Survey: 2020 Results

Justin Held, CEBS
Senior Research Analyst at the International Foundation 

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Justin Held, CEBS

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