COVID-19 be damned, the numbers of 401k millionaires are back up near record highs according to the latest data from Fidelity Investments.
An incredibly strong second quarter for the stock market translated to big rebound gains for 401k accounts, with Fidelity reporting the number of individuals with 401k plan balances of $1 million or more in plans where Fidelity is recordkeeper spiking 49% compared to the end of the first quarter to land at 224,000.
The ranks of 401k millionaires have gone up and down like a yo-yo lately, with the all-time high of 233,000 being hit at the end of Q4 2019 before plunging back to 150,000 during the first quarter of 2020 as the pandemic hit. A year ago, Fidelity showed 196,000 401k millionaires at the end of Q2.
The big jump in millionaire ranks this second quarter can obviously be attributed to the surprisingly strong rally by the stock market during that timeframe. Wall Street experienced its best quarter since 1998 between the beginning of April and the end of June, with the S&P 500 gaining nearly 20% to counter the coronavirus-fueled 20% drop suffered in the first three months of the year, the market’s worst quarter since the 2008 financial crisis.
The 30-stock Dow ended Q2 with a 17.8% gain, the average’s biggest quarterly rally since the first quarter of 1987, when it rose 21.6%. The Nasdaq Composite jumped 30.6% in the second quarter, its best quarterly performance since 1999.
401k investors who stayed the course benefitted in a big way from the recovery, as the average 401k balance increased to $104,400 in the second quarter, a 14% increase from Q1 but still down 2% from a year ago.
IRA millionaire ranks swell, too
Fidelity, America’s biggest individual retirement account provider, also showed the ranks of IRA millionaires rebounded sharply in Q2, and almost set a record.
The 204,000 IRA millionaires with accounts custodied with Fidelity was up 30% over the 157,000 at the end of the first quarter.
The all-time high number of IRA millionaires was 208,000, set in the fourth quarter of 2019.
- SEE ALSO: Where Are We in 401k Recovery?
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
