[9370]
October 28, 1997
TO: PENSION COMMITTEE No. 42-97
PENSION OPERATIONS ADVISORY COMMITTEE No. 43-97
RE: INSTITUTE’S SECOND SIMPLE PLANS SURVEY
______________________________________________________________________________
The Institute recently surveyed its committee members to estimate the number of
SIMPLE plans and accounts that have been established between January 1 and July 31, 1997. In
particular, we sought to identify the aggregate number of plans and accounts, compute average
plan size, identify the types of employers establishing plans, and determine the extent to which
the "Designated Financial Institution" concept was in use. The survey was the second such
Institute survey.
The SIMPLE program continues to be extremely popular, especially among the smallest
employers -- those with under 10 employees. The trends found in the most recent survey are
consistent with trends identified in the first survey:
* Plan establishment is concentrated among employers with under 10 employees
* The SIMPLE-IRA is preferred over the SIMPLE-401(k)
* About 30% of employers that have established SIMPLE plans have elected to use
the "designated financial institution" aspect of the program
The survey also found that as of July 31, 1997, at least 18,261 SIMPLE IRA plans with
95,431 IRA participant accounts, had been established. These numbers constitute almost four
times the number of participant accounts and three and one-half times the number of plans
established as of March 31, 1997.
Eighty-seven percent of employers establishing SIMPLE plans are employers with
under 10 employees and over ninety-seven percent of employers establishing plans are those
with 25 or fewer employees. Average SIMPLE plan size is about 5.2 participants per plan.
About forty-six percent of SIMPLE plan formation is attributable to unincorporated entities,
such as sole proprietorships and partnerships.
- 2 -
Remarkably, respondents reported only 50 withdrawals from SIMPLE plan accounts.
Given more than 95,000 accounts, this is a negligible number equal to well under one-tenth of
one percent of all accounts. Respondents were unable to identify which SIMPLE plans were
established by employers who previously offered no retirement plan and which were replacing
an existing arrangement.
Further details are found in the attachment.
Russell G. Galer
Associate Counsel - Pension
Attachment (in .pdf format)