401(k) Account Access Statistics in 2023

Analysis

The number of workers in the US with access to 401(k) plans up 6.4% in 2023

2023 represented the second year in a row of growth in the number of US employees with access to 401(k) plans. The 6.4% growth was a consolidation of the 7.8% gains in 2022, and the number of workers with access has grown in four out of the last five years. 

This growth pushed the number of workers with access to 401(k) accounts to cross the 70 million threshold for the first time. The year ended with 71.5 million workers having access to 401(k) plans, compared to 67.2 million in 2022, and 62.3 million in 2021. 

What accounts for this acceleration in growth? The SECURE Act of 2019 and the ensuing SECURE Act 2.0 at the end of 2022 provide incentives in the form of tax breaks to employers who offer retirement plans to their employees. They also contain sections that gradually reduce the tenure and number of hours part-time employees must work in order to gain eligibility to these plans. The acronym, SECURE, stands for “Setting Every Community up for Retirement Enhancement.” A second likely factor is an improving macroeconomic environment, as workers who joined more established companies or those with an improved outlook were offered access to retirement plans.

Nearly 60% of US workers now have access to 401(k) plans

401(k) plans are a subset of the broader category of defined contribution retirement plans, including 401(k), 403(b), and 457-type plans. Unlike traditional pension plans that guarantee a certain level of benefits post-retirement, these are designed to accumulate savings based on worker and employer contributions. 401(k) plans are the leading choice among defined contribution plans. For example, in 2021, 84% of participants in defined contribution plans in 2021 were in 401(k)s, according to Department of Labor data. 401(k) plans can also be rolled over to IRA accounts when employees change jobs.

These numbers in this report reflect private sector workers, and exclude all workers in government (public sector) jobs. For these, defined benefit plans remain common. 

The proportion of US workers with access to defined contribution plans has grown steadily over the years, and 401(k) availability has largely driven that broader story. In 2023, 67% of all US employees, 84.6 million total, had access to defined contribution plans. Of these, an estimated 84.5% or 71.5 million had access to 401(k) plans.

This growing prevalence of 401(k) access comes after a few years of relative stasis in the proportion of US workers with access to 401(k) plans. In the three years straddling the pandemic year of 2020, growth in access to 401(k) programs was relatively flat. In 2019, 53.2% of US workers had access to 401(k) programs, but that number barely budged in 2020, reaching 53.4% at the end of that year, and then growing modestly to 54.4% in 2021. Significant growth resumed in 2022, as we have seen, and by the end of that year 55.5% of workers had access to 401(k) plans. 

There are a few factors that explain the rapidly growing proportion of workers with access to these plans in the latter two years. One is companies getting ahead of US policy like the aforementioned SECURE Act laws that are encouraging employers to offer 401(k) access. But also involved were disruptions in the labor market and economy during the pandemic, which meant that there was room for faster growth in retirement-plan take-up once workers were reabsorbed into the workforce in 2022 and 2023.

Offering 401(k) programs is the norm, with the notable exception of small- and medium-sized businesses

While tax breaks and provisions under SECURE Act could begin to change the calculus, small businesses are the exception to the otherwise broad availability of 401(k) programs at US companies. 

In the Fidelity study cited above, only 34% of businesses with less than 100 employees offered retirement plans. Of those, 48% said they did not do so because “they can’t afford one,” 22% said “they’re too busy running their company” to start one, and 21% said they were unsure on how to get such a program started. 

Analyzing this data, it appears the barriers to 401(k) adoption are directly addressable. Better education and marketing of these plans would take care of the 21% who simply don’t know how to get started, and better products and technology could help close the gap with the business owners who say they are too busy. Meanwhile, pricing and government policy could be effective in addressing the affordability issue. 

Let’s look back at the 2023 SHRM study of 4,217 of its US members, which is cited above. It found that the overwhelming majority, i.e., 94% of the employers represented, offered defined contribution programs. This study was not restricted to large businesses. The survey respondents included HR professionals working at businesses with anywhere from two to 25,000 employees, across industries, per the methodology. The factor uniting the businesses represented in the survey was the presence of a human resources professional who is a member of SHRM, which indicates these are businesses with some human resources infrastructure and affordances. 

In sum, surveys indicate that at least a minority of small businesses have found ways to bridge the affordability gap. According to ShareBuilder 401k, which offers 401(k) services to businesses, a small business with 10 employees might only pay $100 monthly in administrative services fees when setting up a 401(k). Moreover, these costs are tax deductible and small businesses setting up their first 401(k) plan are often eligible for tax credits.

Methodology

Key sources

The following sources were critical to our analysis: 

• US Department of Labor, Employee Benefits Security Administration, Private Pension Plan Bulletin, Abstract of Form 5500 Annual Reports, 2019 to 2021.¹  
• Bureau of Labor Statistics (BLS), Employee Benefits in the United States series, from the National Compensation Survey; 2019 to 2024² 
• SHRM, annual Employee Benefits Survey, 2023 and 2024³
• Fidelity data on 401(k) plans with employer contribution⁴

Estimate on percentage of workers with access to 401(k) plans

It’s important to note that in this metric, we focused only on private-sector workers, aiming at a quantitative estimate for the percentage with access to 401(k) plans. Government workers, i.e. public-sector workers in state and local government, are excluded from these estimates. Although these government workers constitute a workforce of some 19 million people as of March 2023, these workers have significantly higher proportions of participation in defined benefit pension plans, and significantly lower proportions of participation in defined contribution plans, including 401(k)-type plans. For this reason, it would make little sense to combine them into estimates for access and participation in retirement benefits. Indeed, the BLS states that the “incidence of employee benefits in state and local government should not be directly compared to private industry.” Federal workers and military personnel are also not included in this report, and they form their own separate categories in BLS data. 

This analysis bases itself on two datasets: 

• A BLS survey series on the percentage of private-sector workers with access to defined contribution plans. This data is collected by the National Compensation Survey and has all the limitations inherent to a survey methodology, i.e. it asks a (statistically significant) sample group to self-report whether they have access to certain types of benefits. 
• The Employee Benefits Security Administration’s “Private Pension Plan Bulletin” based on Form 5500 annual reports, collects data on individual businesses’ retirement plans. The bulletin’s data excludes single-member retirement plans, e.g. plans for self-employed individuals. It also “double counts” workers in more than one plan (where one worker with access to plans from different providers would be counted for each provider, etc.). We’ll return to the Bulletin in the more detailed methodology below.  

With these two sources, we can arrive at a meaningful estimate of the percentage of American workers with access to 401(k) type plans. The methodology has several key steps: 

1. The BLS survey series, “Employee Benefits in the United States,” offers annual snapshots of the percentage of workers with access to defined benefits plans and defined contribution plans. For this study, as already mentioned, we focus on private sector workers, who make up approximately 87% of the civilian workforce (essentially all workers who are not federal employees or military personnel). The data is also included in an annual series on the “BLS Data Viewer.” 
2. The same survey series also reports the estimated number of private-sector workers notionally represented in these surveys. For example, in 2023, when the BLS estimates that 67% of US private sector workers have access to defined contribution (DC) plans, and the March 2023 release lists the total number of private sector workers in the US as 126,227,200. 
3. By applying the percentage result to the number of workers represented we can arrive at the number, rather than just the percentage, of workers who have access to DC plans. But how many of these workers are in 401(k)-type plans? Other DC plan types include 403(b) and 457 plans, and some workers might have access to only a non-401(k) plan. 
4. For an estimate on the proportions of 401(k) type plans involved, we go to the annual Pension Plan Bulletin, which tabulates data collected through the Form 5500 filings businesses must fill out on their benefits plans. From this form, we can estimate the percentage of DC plan participants who also have access to 401(k)-type plans. This data lists the number of participants in DC plans and the subset of those that are in 401(k)-type plans. 
   1. As mentioned, the Bulletin double-counts participants. The report’s explanatory footnote states: “Participant counts in this report include double counting of workers in more than one plan.” In other words, if an individual has opened multiple retirement accounts, of any of the types covered in the data, each of those accounts will be counted as an incremental “participant.” Since participation is loosely defined as any plan with a balance, and it’s legal for workers to open multiple DC accounts, it’s safe to assume that participant counts will be meaningfully inflated, i.e. participant accounts will overstate the actual number of individuals with DC plans of various types. In the report, 401(k) plans are distinguished from other types of defined contribution plans, such as 403(b)s or 457-type plans. 

That said, there’s no reason to think that 401(k) plans will be any more (or less) miscounted than the number of 403(b) plan participants or any other type of DC plan. 

1. According to the Bulletin, the percentage of 401(k)-type plan participants among the wider DC-plan participant pool runs between 83% to 84% in the 2019 to 2021 period. This coincides with other data on the prevalence of 401(k) participation in the DC-plan category. For example, in its 2023 America Saves Report, Vanguard explicitly excludes 300,000 403(b) plan participants from a handful of the report’s tables. Elsewhere, the report states that the study covers 2.1 million total participants, “almost all of which” are in some kind of 401(k)-type plan (the report does not mention 457-type plans). Going by these proportions, 86% of the Vanguard customer pool is in 401(k) plans, and the balance is in 403(b) plans. 
2. While it’s true that 403(b) and 457 plans are often offered by government employers, they are also offered in the nonprofit sector, so we would not necessarily expect the prevalence of non-401(k) plans to be misrepresented in the Bulletin in comparison to what is seen in practice.
3. Another limitation of the Private Pension Bulletin is that the data only goes to 2021. Here, however, we see that the percentage of participants in DC plans who have access to a 401(k) plan barely changes from year to year. It hovers just below 85% in 2019, 2020, and 2021. To extend the series, we simply estimate the average percentage-point increase year-to-year in the historical series, and apply it to 2022 and then 2023 for an estimate of the percentage in those two years. 
4. In sum, we rely on the Bulletin for the percentage of DC plan participants who also are participants in 401(k) plans (as opposed to exclusively in 403(b) and other alternatives). We can apply this percentage to the earlier survey results on the percentage of private sector workers with access to DC plans, to in turn estimate the percentage of individuals among those workers who have access to 401(k)s. While “access” and “participation” are admittedly different concepts, we can reasonably expect that the proportion of DC plan “participants” who participate in a 401(k) will be similar to the proportion with “access” to a DC plan who will also have access to a 401(k) type plan.  

We believe our estimates are well-supported because they rely on a simple methodology that builds on two long-running federal government data sources. The first is part of the National Compensation Survey and another is based on data collected via Form 5500. The latter, without modification, serves us as a conservative proxy for the prevalence of 401(k)s within the defined contribution-plan ecosystem. With this two-step methodology, we arrive at a meaningful estimate for the adoption of 401(k) accounts in the US, and a useful metric with which to track the uptake of 401(k)s among future retirees.

Footnotes