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Defaults, attention, and operational reliability in 401(k) plans: evidence from Form 5500 data on returns and participant behavior
Dissertation   Open access

Defaults, attention, and operational reliability in 401(k) plans: evidence from Form 5500 data on returns and participant behavior

W. Scott Hinds
Doctor of Business Administration (D.B.A.), Drexel University
May 2026
DOI:
https://doi.org/10.17918/00011419
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Abstract

Behavioral sciences Automatic enrollment Defined contribution plans Form 5500 Plan compliance
This research explores how employer plan-design choices both intentional and by default relate to participation trends and asset growth in 401(k) plans, using audited Form 5500 data. A set of 724 plans was analyzed over a five-year period (2017-2021) using fixed-effects regression to examine variables associated with plan participation, contribution levels, and plan-level returns. The variables of interest were (i) default structures (automatic enrollment), (ii) administrative spending per participant (as a proxy for sponsor attentiveness), and (iii) operational red flags (late remittances and corrective distributions). Returns were constructed from filings and were evaluated as downstream outcomes of participation and saving. Grounded in behavioral finance, the study treats plan features and compliance signals as cues that shape saving behavior. The strongest finding is that a higher percentage of plan assets in participant loans is negatively associated with the plan rate of return (B ~ -2.406, p < .001), consistent with classical portfolio mechanics: borrowed assets do not compound at market rates. Additionally, automatic enrollment is associated with lower loan usage, and administrative spending per participant correlates with higher contributions. However, automatic enrollment alone does not increase contribution amounts, and compliance exceptions operate in the opposite direction from the prediction, suggesting that post-incident remediation and heightened sponsor attention may reduce borrowing rather than increase it. The results of this study offer a participation-first view of plan design grounded in audited regulatory data rather than surveys or single-employer case studies. The practical takeaway is to prioritize thoughtful defaults and consistent operational quality over a strict "lowest-fee-wins" mindset. Key limitations include plan-level reporting and limited investment-lineup detail; future work should examine fund selection quality and participant-level behavior. The evidence shows that employer defaults and operational quality primarily move participation; asset growth and returns follow through that participation channel. The audited Form 5500 approach strengthens external validity and sets up practical benchmarking for sponsors while flagging limits around investment-lineup granularity and participant-level detail. Keywords: 401(k), Form 5500, defined contribution plans, participation, asset growth, automatic enrollment, behavioral finance, administrative fees, plan compliance.

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