Wow! 401k Plan Assets Hit $5 Trillion

$7.3 trillion in all employer-based DC plans

401k assets, retirement, Investment company instituteThe sky's the limit.

The Cubs win the World Series in 2016, 401k assets hit $5 trillion in 2017. We’re on something of a milestone streak.

Whether it’s the ‘Trump bump’ or more coverage and contributions, the Investment Company Institute reports U.S. retirement assets totaled $26.1 trillion as of March 31, up 3.2 percent from December, which account for 34 percent of all household financial assets.

Assets in individual retirement accounts totaled $8.2 trillion at the end of the first quarter, an increase of 4.1 percent from the end of the fourth quarter of 2016.

Defined contribution plan assets were $7.3 trillion, up 3.7 percent from year-end 2016. Government defined benefit plans—including federal, state, and local government plans—held $5.5 trillion in assets, a 2.1 percent increase.

Private-sector DB plans held $3 trillion in assets at the end of the first quarter of 2017, and annuity reserves outside of retirement accounts accounted for another $2.1 trillion.

Defined Contribution Plans

As mentioned, Americans held $7.3 trillion in all employer-based DC retirement plans on March 31, of which $5 trillion was held in 401k plans, up from 4.8 trillion the previous quarter.

In addition to 401k plans, $565 billion was held in “other private-sector DC plans,” $932 billion in 403b plans, $290 billion in 457 plans, and $484 billion in the Federal Employees Retirement System’s Thrift Savings Plan (TSP).

Mutual funds managed $3.2 trillion, or 64 percent, of assets held in 401k plans at the end of March 2017.

With $1.9 trillion, equity funds were the most common type of funds held in 401k plans, followed by $890 billion in hybrid funds, which include target date funds.

Individual Retirement Accounts

IRAs held $8.2 trillion in assets at the end of the first quarter of 2017. Forty-eight percent of IRA assets, or $3.9 trillion, was invested in mutual funds.

With $2.1 trillion, equity funds were the most common type of funds held in IRAs, followed by $865 billion in hybrid funds.

Other Developments

Total U.S. retirement entitlements were $30.3 trillion, including $26.1 trillion of retirement assets and another $4.2 trillion of unfunded liabilities.

Including both retirement assets and unfunded liabilities, retirement entitlements accounted for 39 percent of the financial assets of all US households at the end of March.

Unfunded liabilities are a larger issue for government DB plans than for private-sector DB plans. As of the end of the first quarter of 2017, unfunded liabilities were 13 percent of private-sector DB plan entitlements, 32 percent of state and local government DB plan entitlements, and 54 percent of federal DB plan entitlements.

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