Participants get it, and should give themselves (or their 401k advisors) a pat on the back.
They stayed the course for most of 2018, according to the Investment Company Institute, although late-year market volatility wasn’t included in the analysis.
Overall withdrawal activity was low, contributions high, asset allocations reasonable and loan activity stable.
Withdrawals
Specifically, defined contribution (DC) plan withdrawal activity in the first three quarters of 2018 remained low and was similar to the activity observed in the first three quarters of 2017.
In the first three quarters of 2018, 2.9 percent of DC plan participants took withdrawals, compared with 2.8 percent in the first three quarters of 2017.
Levels of hardship withdrawal activity also remained low.
Only 1.4 percent of DC plan participants took hardship withdrawals during the first three quarters of 2018, compared with 1.3 percent in the first three quarters of 2017.
Contributions
The commitment to contribution activity in the first three quarters of 2018 continued at the high rate observed in the first three quarters of 2017.
Only 2.2 percent of DC plan participants stopped contributing in the first three quarters of 2018, compared with 2.4 percent in the first three quarters of 2017.
Asset Allocations
Most DC plan participants stayed the course with their asset allocations as stock values increased over the first nine months of the year.
In the first three quarters of 2018, 8.4 percent of DC plan participants changed the asset allocation of their account balances, compared with 8.0 percent in the first three quarters of 2017.
In the first three quarters of 2018, 4.4 percent changed the asset allocation of their contributions, compared with 4.8 percent in the first three quarters of 2017.
These levels of activity are similar to activity observed in the same time frame a year earlier.
Loans
DC plan participants’ loan activity was little changed at the end of September 2018.
At the end of September 2018, 16.4 percent of DC plan participants had loans outstanding, compared with 16.7 percent at year-end 2017.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.