|Contribution rate from company to the plan||6% to 8% of pay per year for all eligible employees.||4% of pay of those eligible employees making deferrals per year (about two-thirds to three-quarters of eligible employees defer into the plan).|
|Rate of return||Department of Labor data indicate ESOPs had a 9.1% annualized rate of return from 1990-2010.||Department of Labor data indicate 401(k) plans had a 7.8% annualized rate of return from 1990-2010.|
|Volatility||Department of Labor data show that ESOP returns were less volatile between 1990 and 2010 than 401(k) plans.||Department of Labor data show that 401(k) plan returns were more volatile between 1990 and 2010 than 401(k) plans.|
|Diversification in the plan||Mature ESOPs tend to partly diversify over time and participants can choose to partially diversify at age 55 and 10 years of participation.||401(k) plans are generally, but not always, well diversified.|
|Secondary plans||ESOP companies are slightly more likely to have a 401(k) or pension plan than non-ESOP companies are to have any retirement plan.||Most companies with 401(k) plans do not have secondary plans.|
|Coverage of younger and lower income employees||All employees meeting minimum age and service requirements are in the plan and receive contributions based on a percentage of pay or more level formula. Employee contributions are rarely required.||Most 401(k) plans require employees to make deferrals to get company matching contributions; lower paid and younger employees are the least likely to defer and defer and lower percentages of pay.|
|Job security||Employees in employee ownership plans are one-third to one fourth as likely to be laid off as non-plan participants.||Employees not in employee ownership plans are three to four times as likely to be laid off as employees in these plans.|
|Bottom Line||ESOP participants have approximately 2.2 times as much in their accounts as participants in comparable non-ESOP companies with DC plans||Most of the money in a 401(k) plan comes from the employees, not the company. Median account balances for 401(k) participants age 55-64 are only $120,000 (2012 data from Center for Retirement Research at Boston College).|
*Sources: Data compiled from Department of Labor plan filings; Plan Sponsor magazine employer survey; Employee Benefit Research Institute, and the General Social Survey.
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