Nearly half (48%) of private industry workers in the U.S. participated in a defined contribution (DC) retirement plan in 2022, according to the latest figures from the Employee Benefit Research Institute (EBRI).
In “Workplace Retirement Plans: By the Numbers,” an update to EBRI’s fact sheet on retirement plans released today and provided by EBRI’s Retirement Security Research Center, the data shows 52% of civilian workers participated in any retirement plan in 2022, while the aforementioned 48% participated in a DC plan. EBRI cites a variety of Employee Benefits Security Administration (EBSA) and U.S. Bureau of Labor Statistics (BLS) data in reporting the figures.
EBRI’s new report also revealed there were 85.3 million private-sector workers who were active participants in a DC plan in 2020. This includes 72.2 million private-sector workers who were active participants in 401(k) plans. There were 142.3 million total participants in private pension plans (DB and DC) in 2020, representing $11.9 trillion, including 97.3 million who were active participants.
Despite the large quantity of small (fewer than 100 employees) DC plans, which consist of 84% (584,864) of the total DC plan number, these small plans contain only 13% (127.7 million) of the total participants and 13% ($1.0 trillion) of the total assets.
On the contrary, large employers (more than 10,000 employees) comprise a smaller percentage of the total DC plan provider number (1,234 and less than 1%). But more than 42% (42.1 million) of the participants and 46% ($3.6 billion) of assets are in these large DC plans.
More stats of note:
• There were 31.9 million defined benefit (DB) plan participants in 2020, including 12.01 million private-sector workers who are active participants in a DB plan.
• The number of taxpayers participating in an individual retirement account (IRA) in 2019 was 62.8 million.
• 12.4% of all families owned an IRA and any type of DC plan in 2019, whereas 33.1% of families with any type of DC plan also had an IRA.
401(k) account balances
In addition to breaking down worker participation, the report goes on to detail account activities in various types of retirement plans.
The EBRI report says the average 401(k) balance among all 11.5 million 401(k) plan participants at the end of 2020 was $87,040, while the median was a much lower $17,961. Tabulations for these statistics were from the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Account balances are participant account balances held in 401(k) plans at the participants’ current employers and are net of plan loans. Retirement savings held in plans at previous employers or rolled over into IRAs are not included.
The report also includes charts with breakdowns of “Average 401(k) Balance by Number of Plan Participants 2020,” “Average 401(k) Balance by Plan Assets, 2020,” and “Average Asset Allocation of 401(k) Plan Accounts by Participant Age, 2020.”
Point-of-retirement trends
A few more interesting nuggets from the report pertain to how participants behaved when leaving jobs.
In an examination of job terminations from 2008 to 2017, 22% of people ages 60 or older kept their entire balance in the retirement plan, 34% rolled their money over to another vehicle, 31% cashed out, and 14% had a combination of activities (e.g., partial distribution).
Because people with small balances are most likely to cash out, the report said a different picture emerges when examining this on an asset-weighted basis: 38% of funds stayed in the plan, 48% were rolled over, and 14% got cashed out.
The median age of the owners of IRAs receiving a rollover in 2017 was 48.0, meaning that many are rolling their assets over well ahead of retirement.
SEE ALSO:
• State IRA Programs Boost Private 401(k) Plan Adoption
• ‘State of the Industry’ Report: Most Participants Know They Aren’t Saving Enough
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.
