Employer backing for 401(k)s hits new high as plan costs continue to fall

Employer funding of workplace retirement plans has climbed to its highest level on record, reflecting a sustained shift among large US companies toward more robust savings support for workers.

Data from a new industry analysis shows that employers made contributions to 91% of large private-sector 401(k) plans in 2023, up from 85% in 2007. Over the same period, the share of participants covered by employer contributions rose from 91% to 94%.

The findings also highlight the growing financial role employers play in retirement savings. Companies accounted for $181bn, or 35%, of all contributions to large 401(k) plans in 2023.

Plan design features intended to boost participation have also become more widespread. Automatic enrolment continues to gain traction, particularly among larger programmes. More than half of plans with assets exceeding $50m reported using auto-enrolment, while adoption surpassed 60% among plans with more than $1bn in assets. Across all large plans, 43% now automatically enrol employees.

Meanwhile, overall plan costs have continued to trend lower over the past decade. Total expenses measured on a plan-weighted basis fell from 1.02% in 2009 to 0.74% in 2023. Participant-weighted expenses declined from 0.65% to 0.48%, while asset-weighted costs dropped from 0.47% to 0.30%.

Cost reductions were recorded across plans of all sizes, with smaller plans experiencing the most pronounced decreases — a shift that may reflect operational efficiencies and intensified competition among service providers.

The research draws on audited regulatory filings from tens of thousands of large defined contribution plans, typically those with at least 100 participants. The data provides a detailed snapshot of evolving plan structures, investment offerings and employer contribution trends.

Together, the developments point to continued momentum toward broader access to workplace retirement savings, improved participation mechanisms and stronger employer financial support — factors likely to shape long-term retirement outcomes for US workers.

"The measure of total plan costs has fallen significantly in the decade-plus that we've been tracking it using MarketPro Retirement powered by Brightscope. Participants are saving money on plan costs and investment options. This is good news for American retirement savers," added Brooks Herman, Managing Director, ISS MI.