An overwhelming majority of U.S. households, whether they own defined contribution retirement accounts or not, support their continued existence with the current tax advantages and contribution limits.
The support for the plans was shown in a report, America's Commitment to Retirement Security: Investor Attitudes and Actions, conducted by the Investment Company Institute (ICI) and confirms findings from earlier years.
The survey of 3,000 U.S. households of various demographics and financial backgrounds asked their views of changing defined contribution retirement plans.
The survey shows 85% of households do not want the tax advantages changed and 83% oppose any reduction in employees' account contribution limits.
For those owning defined contribution plans, the percentage wanting to maintain the tax advantages rose to 90%.
At the same time, 88% of households owning DC accounts or IRAs agree incentives for retirement saving should be a national policy priority and 76% of those who do not own them agree.
The questions were asked amidst the debate in Congress about how to balance the budget and cut government expenses.
Ninety percent of those surveyed who have defined contribution plans say the plans help promote retirement savings and that the immediate tax savings are a big incentive to contributing.
Similar to previous years, 85% want to make their own investment decisions and 79% feel their plans offer a good selection of investment options. Sixty-five percent have a favorable impression of 401(k) plans and three quarters express confidence defined contribution plans will help them meet their retirement goals.
Almost all defined contribution plan participants continued to contribute to their plans in 2011 and only 2.8% took any withdrawals. Loan activity remained similar to 2010 at just over 18% of participants taking loans.
"As in prior years, our 2011 survey confirms that Americans, whether they own retirement accounts or not, have a great deal of confidence in the 401(k) system," says Sarah Holden, ICI senior director of retirement and investor research. "Despite the ups and downs of the stock market and other troubling financial and economic news, favorable attitudes and DC plan investors' retirement savings patterns are holding steady."
ICI president and CEO Paul Schott Stevens adds, "It is clear that the current tax incentives to encourage Americans to build a nest egg in retirement accounts are effective and command the overwhelming support of the American public."
-Karen DeMasters