Research and Analysis by Annika Sundén

What Determines 401(k) Participation and Contributions?
from Social Security Bulletin, Vol. 64, No. 3 (released January 2003)
by Alicia H. Munnell, Annika Sundén, and Catherine Taylor

In addition to variables such as age, income, and job tenure, the length of an employee's planning horizon is a crucial factor affecting participation in and contribution to a 401(k) plan. On the plan side, the most important factors are the availability of matching contributions from the employer and the ability of employees to gain access to their funds before retirement through borrowing. Good information about the need for retirement savings and good plan design could significantly increase eligible employees' participation and contributions.