Few DC Plan Participants Withdrew Funds in 2019, ICI Finds

Withdraw funds, DC plan participants

Only a small percentage of DC plan participants withdrew funds in 2019, which probably won't be the case in 2020.

Only 3.9% of defined contribution (DC) retirement plan participants withdrew money from their accounts in 2019, according to a new report from the Investment Company Institute (ICI).

While that is barely up from 3.4% withdrawing money in 2018, any bets as to what the percentage will rise to in this so-far dismal year we call 2020? It will likely make you long for the good old days of 2019.

Levels of hardship withdrawal activity also remained low in 2019, with only 1.9% of DC plan participants taking hardship withdrawals during 2019, compared with 1.6% in 2018. With the CARES Act making it much easier for DC plan participants to raid their 401ks in an effort to provide relief to those impacted by the coronavirus pandemic, that’s another percentage that figures to see a big increase in 2020.

According to ICI’s “Defined Contribution Plan Participants’ Activities, 2019” report, the vast majority of DC plan participants continued contributing to their retirement savings during 2019.

The latest recordkeeper data indicate that savers remained committed to saving for their futures by continuing to contribute to their DC plans: only 2.3% of DC plan participants discontinued their contributions during calendar year 2019.

Other findings include:

ICI has been tracking participant activity through surveys of plan recordkeepers since 2008. 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. This update provides results from ICI’s survey of a cross section of recordkeeping firms representing a broad range of DC plans. Visit ICI’s 401(k) Resource Center for more information.

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