401(k) plans held $7.2 trillion in assets as of June 30, 2023—comprising the lion’s share of total U.S. defined contribution plan assets that hit $10.2 trillion at the end of the second quarter, up 4.1% from Q1 2023 ($6.9 trillion).
The figures are from quarterly retirement data tables in the Investment Company Institute’s “The US Retirement Market, Second Quarter 2023,” released Sept. 14.
Total U.S. retirement assets were $36.7 trillion as of June 30, 2023, up 3.1% from March 31, 2023. Retirement assets accounted for 31% of all household financial assets in the United States at the end of June 2023.
In addition to 401(k) plans, at the end of the first quarter, $580 billion was held in other private-sector DC plans, $1.2 trillion in 403(b) plans, $420 billion in 457 plans, and $794 billion in the Federal Employees Retirement System’s Thrift Savings Plan (TSP).
Mutual funds managed $4.5 trillion, or 62% of assets held in 401(k) plans at the end of June 2023. With $2.6 trillion, equity funds were the most common type of funds held in 401(k) plans, followed by $1.3 trillion in hybrid funds, which include target date funds.
IRA assets
Assets in individual retirement accounts (IRAs) totaled $13.0 trillion at the end of the second quarter of 2023, an increase of 3.9% from the end of the first quarter of 2023. Forty-two percent of IRA assets, or $5.5 trillion, was invested in mutual funds. With $3.1 trillion, equity funds were the most common type of funds held in IRAs, followed by $1.0 trillion in hybrid funds.
DB plan assets
Government defined benefit (DB) plans—including federal, state, and local government plans—held $8.0 trillion in assets as of the end of June 2023, a 0.8% increase from the end of March 2023. Private-sector DB plans held $3.2 trillion in assets at the end of the second quarter of 2023, and annuity reserves outside of retirement accounts accounted for another $2.3 trillion.
Mutual fund assets
The ICI report also noted that mutual funds play a key role in U.S. households’ individual account-based retirement savings, but are less important for traditional DB plans.
Mutual funds represent $11.2 trillion, or 48% of the assets held in IRAs and DC plans in mid-2023. Mutual funds are also held through variable annuities (VAs), which have similar tax advantages and restrictions as retirement plans and are counted as part of Americans’ nest egg for retirement. In mid-2023, VA mutual fund assets outside retirement plans amounted to $1.3 trillion.
SEE ALSO:
• 401(k) Loan Activity Among Younger Workers Rises With Age
• DC Plan Asset Growth in Q1 Outpaces Overall Retirement Asset Gains