Good news on the 401k-participant behavior front. Americans continued to save for retirement through defined contribution plans early this year, according to ICI’s “Defined Contribution Plan Participants’ Activities, First Quarter 2019.”
The study tracks contributions, withdrawals, and other activity based on DC plan recordkeeper data covering more than 30 million participant accounts in employer-based DC plans.
The latest recordkeeper data indicates plan participants remain committed to saving and investing; only 0.9 percent of DC plan participants stopped contributing to their plans in the first quarter of 2019.
Other findings include:
Plan participants stayed the course in asset allocation
In the first quarter of 2019, 4.2 percent of DC plan participants changed the asset allocation of their account balances, down from 5.1 percent in the first quarter of 2018.
Meanwhile, 2.9 percent of participants changed the asset allocation of their contributions in the first quarter of 2019, down from 3.5 percent in the first quarter of 2018.
Withdrawal activity for DC plans remained low
In the first quarter of 2019, 1.4 percent of DC plan participants took withdrawals, similar to the share in the first quarter of 2018.
Levels of hardship withdrawal activity also were low, with only 0.5 percent of DC plan participants taking hardship withdrawals during the first quarter of 2019, the same share as in the first quarter of 2018.
DC plan participants’ loan activity edged down
At the end of March 2019, 15.9 percent of DC plan participants had loans outstanding, compared with 16.7 percent at the end of 2018.
ICI has been tracking DC plan participant activity through recordkeeper surveys since 2008. This update provides results from ICI’s survey of a cross-section of recordkeeping firms representing a broad range of DC plans. Please visit ICI’s 401(k) Resource Center for more information.
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.
