A booming economy in part contributed to a further rise in 401(k) balances, as well as retirement assets overall.
The Investment Company Institute reports that Americans held $7.7 trillion in all employer-based defined contribution retirement plans on September 30, of which $5.3 trillion was held in 401k plans.
Total U.S. retirement assets were $27.2 trillion, up 2.3 percent from June 30. Retirement assets accounted for 35 percent of all household financial assets in the United States at the end of September 2017.
Retirement market assets grew across all categories in the third quarter of 2017.
Assets in individual retirement accounts totaled $8.6 trillion at the end of the third quarter of 2017, an increase of 2.7 percent from the end of the second quarter.
Defined contribution (DC) plan assets rose 2.5 percent in the third quarter of 2017 to $7.7 trillion.
Government defined benefit (DB) plans—including federal, state, and local government plans—held $5.8 trillion in assets as of the end of September, a 2.3 percent increase from the end of June.
Private-sector DB plans held $3.1 trillion in assets at the end of the third quarter of 2017, and annuity reserves outside of retirement accounts were $2.2 trillion.
Defined Contribution Plans
As mentioned, Americans held $7.7 trillion in all employer-based DC retirement plans, of which $5.3 trillion was held in 401(k) plans.
In addition to 401(k) plans, at the end of the third quarter, $585 billion was held in other private-sector DC plans, $967 billion in 403b plans, $305 billion in 457 plans, and $543 billion in the Federal Employees Retirement System’s Thrift Savings Plan (TSP).
Mutual funds managed $3.5 trillion, or 65 percent, of assets held in 401k plans at the end of September 2017. With nearly $2.1 trillion, equity funds were the most common type of funds held in 401k plans, followed by $954 billion in hybrid funds, which include target date funds.
Individual Retirement Accounts
IRAs held $8.6 trillion in assets at the end of the third quarter of 2017. Forty-eight percent of IRA assets, or $4.1 trillion, was invested in mutual funds. With $2.3 trillion, equity funds were the most common type of funds held in IRAs, followed by $906 billion in hybrid funds.
Target Date Funds
Target date mutual fund assets grew 5 percent in the third quarter, reaching $1.1 trillion at the end of September 2017. Retirement accounts held the bulk of target date mutual fund assets. Eighty-seven percent of these assets were held through DC plans (67 percent) and IRAs (20 percent).