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Hands Off Our 401(k)s: Americans Reject Changing Key Features

Practice Management

Asked about their views on defined contribution plans, an overwhelming majority of respondents in a new survey say they value the investment opportunity 401(k) plans provide and are opposed to changing the tax preferences or investment control in those accounts. 

In fact, nearly 9 in 10 individuals (88%) who expressed an opinion had favorable impressions of 401(k) plans, with 35% expressing a “very favorable” impression, according to the Investment Company Institute’s American Views on Defined Contribution Plan Saving, 2022[1]

Like previous results, individuals whose households own DC accounts also expressed appreciation for key features of DC plans. Nine out of 10 DC-owning individuals agreed that these plans helped them “think about the long term” and “made it easier to save.” ICI notes that, for these top-line findings, there generally was little variation in responses across age and income groups.

In addition, 5 out of 10 DC-owning individuals indicated that they probably would not be saving for retirement if not for their DC plans. And saving through their paychecks made about 8 out of 10 DC-owning individuals surveyed less worried about the short-term performance of their investments.

Tax Incentive

Because some opinion leaders and policymakers have questioned the public value of the tax deferral that 401(k) plans and IRAs receive, the ICI asked respondents whether the government should take away these tax incentives. 

Not that any of these proposals are currently “on the table,” but Americans overwhelmingly disagreed with changes that would remove or reduce tax incentives for retirement savings. In this case, about 9 out of 10 (88%) respondents disagreed that the government should take away the tax advantages of DC accounts. Moreover, the same amount (88%) disagreed with proposals that would reduce the amount that individuals can contribute to DC accounts. 

Not surprisingly, opposition to elimination of the tax advantages was the strongest among individuals whose households owned DC accounts or IRAs, with 92% opposing the removal of the tax advantages. Additionally, 79% of individuals without DC accounts or IRAs opposed eliminating the incentives.

Similarly, more than 8 out of 10 (85%) DC-owning individuals agreed that the tax treatment of their retirement plans was a big incentive to contribute. Agreement was high across all age and income groups, although it tended to increase with age and household income, the ICI notes.

Meanwhile, despite the stock market downturn in 2022, respondents also affirmed a preference for control of their retirement accounts. To that end, nearly all (95%) DC-owning individuals agreed that it was important to have choice in and control of the investments in their DC plans. Likewise, more than 8 in 10 (85%) indicated that their DC plan offered a good lineup of investment options.

Respondents also expressed opposition to proposals to require a portion of retirement accounts to be converted into a fair contract promising them income for life from either the government or an insurance company.

“Americans valued current plan design features, and their views on policy changes revealed a strong preference for preserving retirement account features and flexibility. This was especially true for individuals who use the plans and for those most in need of them to supplement Social Security,” write the ICI’s Sarah Holden, Daniel Schrass, Michael Bogdan and Jason Seligman. 

Goal Meeting 

And no matter whether their households had retirement accounts or not, Americans were confident in the ability of DC plans to help individuals meet their retirement goals. Among individuals whose households owned DC accounts or IRAs, about three-quarters (74%) indicated they were confident that DC plan accounts could help people meet their retirement goals. For those individuals whose households did not own DC accounts or IRAs, 65% expressed confidence that DC plan accounts can help people meet their retirement goals.

The report is ICI’s 15th in the series, which summarizes results from a nationally representative survey of more than 2,100 American adults collected during November and December 2022. The survey — which polled respondents about their views on DC plans, and their confidence in 401(k) and other DC plan accounts — was developed by ICI and administered by NORC at the University of Chicago using the AmeriSpeak probability-based panel. 


[1] Note that the survey was conducted before enactment of the SECURE 2.0 Act and does not incorporate questions involving key retirement savings features of the legislation.