“Scoring the Progress of Retirement Savers”
August 31, 2020
Budgeting for Retirement
September 28, 2020
T. Rowe Price did a deep dive into its recordkeeping data and surfaced with a few important points.
Its “Reference Point Report” is an annual client data benchmarking report so plan sponsors can review trends and benchmark their progress and participant behavior across the firm’s client base… ‘We continue to see the importance and significant impact plan design and financial wellness programs have on keeping participants on track with their financial priorities’ by John Sullivan, Editor-In-Chief “
- Plan participation was greater than 79%
- Over 61% of plans at Rowe Price automatically enroll participants, with 37% enrolling at a 6% default deferral
- Average account balances rose to over $100,000, an increase of 8%, although over 34% of eligible participants did not contribute to their plans in 2019
- Employers are increasing match formulas from 3% to a 4% to 5% effective match rage
- Direct rollovers of plan assets increased to 76% in 2019 from 74% in 2018
- Lower rates for cash-out distributions and loans
- Participant usage of loans decreased in 2019 to 22.1%, down from the seven-year high of 24.9% in 2013, but the optional loan provisions included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act could change that trend
- Allocations to company stock investments increased more than 11%
For more information on 401(k) participant behavior and plan design trends, see the article in 401k Specialist.
