What's a good 401(k) participation rate?
In plans Vanguard keeps records for, the average plan had an estimated 86% of eligible employees contributing in 2025, and plans with fewer than 500 participants averaged 83%. Those are large-provider figures, so treat them as a reference point rather than a target.
Vanguard's data also shows a wide gap by how people join: 94% participation where employees are enrolled automatically, against 64% where they sign up themselves.
What does participation rate actually measure?
Four numbers get called participation, and they answer different questions:
- Participation rate: the share of employees who are eligible for the plan and contribute to it. This is the one most provider reports show.
- Take-up rate: the government's version. Of the workers who are offered a retirement plan of any kind, the share who take part.
- Deferral rate: how much of their pay each person puts in. A plan can have high participation and low deferrals, or the other way round.
- Share reaching the full match: how many people put in at least enough to get all of the match you offer. It depends on your match formula, so it's a figure to ask your provider for.
Before comparing your plan with any benchmark, check which measure your report uses and whether it counts eligible employees or everyone on payroll.
What's typical?
Vanguard publishes a yearly study of the plans it keeps records for. It calls the average plan's rate a useful benchmark for a single employer, and in 2025 more than 3 in 4 of its plans had 80% or more of eligible employees contributing.
| Measure | 2025 |
|---|---|
| Average plan participation rate | 86% |
| Average for plans with fewer than 500 participants | 83% |
| All eligible employees across all plans, counted together | 83% |
| Plans with automatic enrollment (all employees counted together) | 94% |
| Plans with voluntary enrollment (all employees counted together) | 64% |
| Median deferral rate | 6.6% of pay |
| Average deferral rate | 7.6% of pay |
The government's survey covers all private employers, and all kinds of retirement plan. It finds take-up is lower at smaller workplaces:
| Establishment size | Take-up rate |
|---|---|
| 1 to 49 workers | 67% |
| 50 to 99 workers | 63% |
| 100 to 499 workers | 72% |
| 500 or more workers | 84% |
| All private industry | 72% |
What moves it?
These are the plan design choices an employer controls:
- Automatic enrollment. Eligible employees are signed up at a default rate unless they opt out. 61% of Vanguard's plans used it in 2025, and those plans had 94% participation against 64% in plans where people enroll themselves.
- Automatic annual increases. The contribution rate goes up a little each year unless the employee says no. It's about how much people put in rather than whether they join. 71% of Vanguard's automatic-enrollment plans increased rates automatically in 2025.
- The match formula. It sets how much an employee has to put in to get all of the match. Ask your provider how many people contribute less than that.
- Help with enrolling. Clear explanations and someone to ask. When we set up a plan, we often go to the employer's office to help people enroll in person, and employees can use the alooola app to manage their accounts.
Does my plan have to enroll people automatically?
It depends on when it was set up. Under SECURE 2.0, a 401(k) plan set up on or after December 29, 2022 has to enroll eligible employees automatically for plan years beginning after December 31, 2024. The starting rate is at least 3% and no more than 10% of pay, rising 1 percentage point a year to at least 10% and no more than 15%. Employees can choose a different rate or opt out.
The requirement doesn't apply to:
- plans set up before December 29, 2022
- businesses that have existed for less than three years
- employers that normally have 10 or fewer employees
- SIMPLE 401(k) plans, church plans and governmental plans
So a plan that has been in place for a few years may not use automatic enrollment at all. Adding it is still an option, and your provider can tell you what it would involve for your plan.
Questions to ask your provider
- Of our eligible employees, how many contribute anything?
- How many contribute at least enough to get the full match?
- What is our median deferral rate, and our average?
- Does your report count eligible employees, or everyone on payroll?
- Do we use automatic enrollment? At what default rate, and does it cover current employees or only new hires?
- Do we have automatic annual increases, and what are they capped at?
- Is our plan required to enroll employees automatically, or does an exception apply to us?
- What help do employees get when they enroll, and in what languages and formats?
alooola.com/business/guides/401k-participation-rate/
- U.S. Bureau of Labor Statistics, National Compensation Survey, Employee Benefits in the United States, Table 1. Retirement benefits: access, participation, and take-up rates, March 2026, private industry workers by establishment size (page last modified Sep 25, 2026); read Oct 13, 2026.
- Vanguard, How America Saves 2026 (25th edition): more than 1,300 qualified plans and nearly 5 million participants for which Vanguard provides recordkeeping, data as of Dec 31, 2025; 2025 participation and deferral figures are Vanguard's estimates. Figures 15, 16, 21, 22, 23, 27 and 29; read Oct 13, 2026.
- Internal Revenue Service, Notice 2024-2, Miscellaneous changes under the SECURE 2.0 Act of 2022 (section 101, automatic enrollment), page last reviewed June 27, 2026; read Oct 13, 2026.
- 26 U.S.C. 414A, Requirements related to automatic enrollment (text via Cornell Law School's Legal Information Institute), read Oct 13, 2026.
General information, not advice for your plan. Benchmarks describe other plans; your provider can give you your own figures.
Want us to look at your plan?
- Tell us about your business: how many people, and your current plan if you have one.
- We send a written proposal that lays out the fees and how the plan would work.
- If you go ahead, we set it up with you and your payroll, and help your team enroll.