Most 401k participants and plan sponsors continue to “stay the course” while navigating the uncertainty surrounding the COVID-19 pandemic according to the latest report from Principal, “CARES Act and Unpredictable Markets: How Plan Sponsors and Participants are Reacting,” capturing activity within its plans through Aug. 31.
Among 401k plan participants, nearly all (99%) served by Principal (data does not include Wells Fargo Institutional Retirement & Trust) continue to maintain their retirement savings contribution rate, remaining steady. Loan requests are down 23% overall from this time in 2019, but average amount requested is up 20%.
The average amount taken for coronavirus-related withdrawals through the CARES Act comes in at $16,500, with 3.2% of participants with a coronavirus-related distribution (CRD) available having taken one as of Aug. 31.
As far as transaction activity, only 0.5% made a transfer in August, with transfer activity continuing to favor more stable/conservative investments. Top asset classes gaining net assets were Bond, Large Cap and Stable Value in August.
Among plan sponsors, approximately 55% have responded to the CARES Act communication, with the vast majority (93%) of them adopting all three CARES Act provisions: adding the special COVID-19-related distributions (CRD), the required minimum withdrawal (RMD) waiver for 2020, and increased loan limits.
August plan amendments have slowed to nearly 70% less than those submitted in July 2020, and just over 1% have made plan amendments to change the employer match since March 11, 2020 (with 90% in that small group halting the employer match).
The latest report finds average daily participant plan website visits in August were consistent with July, which were 10% lower than visits in June. Principal said participant contact center volume in August was up 17% over August of 2019, and call duration is up nearly 20%. Primary topics discussed were plan distributions, loans and withdrawals.
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.
