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.