Average 401(k) Deferral Rate Reaches All-Time High
NEWS
The
Additional trends include:
- The average participation rate in auto-enrollment plans was over 42 percentage points higher than in plans without auto-enrollment.
- Market appreciation and the increase in default deferral rates helped significantly boost participant account balances. On average, accounts saw a
$9,583 increase in 2017 compared to a$2,502 increase in 2016. - Loan usage decreased slightly to 23.4 percent in 2017. The percentage of participants with multiple loans also decreased to 15.6 percent, a drop of 4 percentage points since its peak in 2013 during the 10-year period. However, the percentage of participants with outstanding loans increased by an average of 2.2 percent for participants aged 50 and older. Loan usage was highest among older Generation X and younger baby boomer participants, compared to other age groups.
- Sixty-seven percent of plans offered Roth contributions in 2017. Nearly every age group saw increases in the percentage of participants making Roth contributions, with the largest contributors between the ages of 20 and 40.
- The percentage of eligible participants making catch-up contributions reached a 10-year high, rising to 12.2 percent.
- Plan sponsor adoption of target-date funds reached a 10-year high, rising to 94 percent in 2017. For the first time, target-date funds accounted for the largest percentage of plan assets under management, surpassing all other investment types.
"We continue to see the significant impact plan design and financial wellness programs have on participant behavior, as evidenced by the increase in both participation and deferral rates and decrease in loan usage," said
REFERENCE POINT METHODOLOGY
Data are based on the large-market, full-service recordkeeping universe of
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