COLLECTED WISDOM™ on Studies, Surveys, and Research focused on 401k Plans

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Retirement Confidence Remains High, As Does Interest in Income Options

The 2025 Retirement Confidence Survey by the Employee Benefit Research Institute and Greenwald Research found that most American workers (67%) and retirees (78%) feel confident about living comfortably in retirement. The survey, conducted from January 2 to February 3 with 2,767 participants, revealed that retiree confidence rose by four percentage points compared to last year, while worker confidence decreased slightly by one percentage point. Both groups remain concerned about inflation and potential Social Security cuts.

Source: Planadviser.com, April 2025

Employers With PEPs Have Higher Adviser and Plan Satisfaction

A study by The Standard found that 83% of employers are satisfied with their Pooled Employer Plan. Additionally, plan sponsors reported a 40% increase in satisfaction with their advisers after joining the PEP. Conducted through an online survey of 300 mid-sized U.S. companies from January 3 to January 26, the research indicated a 26% rise in satisfaction with retirement plans, attributed to easier management and reduced costs.

Source: Planadviser.com, April 2025

401k Loan Size Ticks Up for 2024

According to a benchmarking report by T. Rowe Price, the average size of 401k loans increased to $10,250 in 2024, reflecting a 4% rise that slightly outpaced inflation. The report indicates that participants across all age groups, especially those nearing retirement, have increased their loan amounts. Specifically, 11% of respondents over 70 and 10% of those aged 65-69 reported larger loans, compared to 9% for those aged 20-29 and 4% for ages 30-39. Overall, retirement plan loan usage has risen by two percentage points since 2023 but remains lower than the peaks seen from 2015 to 2019.

Source: 401kspecialistmag.com, April 2025

Former Employees Can Lose Thousands to Hidden 401k Fees

A new analysis by PensionBee reveals that individuals who leave their jobs without managing their 401k accounts may incur significant hidden fees, potentially totaling up to $18,000 in account maintenance costs. When employees exit a company, their former employers may start charging fees previously covered by the organization. This situation is compared to COBRA insurance, which allows former employees to maintain their health insurance at a cost, but unlike COBRA, individuals are not informed about these fee changes upon leaving their jobs.

Source: 401kspecialistmag.com, April 2025

2024 MFS DC Plan Sponsor Survey: Building Better Outcomes

The 2024 MFS DC Plan Sponsor Survey reveals insights from 166 U.S. plan sponsors managing over $125 billion in assets and covering over 1.1 million participants. Key topics include plan sponsor confidence, retirement income, investment menus, and plan design. A new feature, the MFS Workplace Retirement Readiness Indicator, measures participant confidence through targeted responses. The report, which also includes views from over 4,000 global plan participants and retirees, highlights trends affecting the defined contribution landscape and identifies discrepancies between employer strategies and employee expectations.

Source: 401kspecialistmag.com, April 2025

The Next-Gen 401k Report

The Next-Gen 401k Report aims to spark dialogue within the retirement plan industry by providing a detailed market map of the current landscape. It identifies innovators and trends transforming the workplace retirement ecosystem, highlighting 12 key trends and 60 top RetireTech companies. This 22-page report offers actionable insights to help industry professionals stay competitive in a dynamically changing market.

Source: Kwpworks.com, April 2025

Decumulation Strategies: Creating Lifetime Income From Defined Contribution Plans

Employer-sponsored defined contribution plans are crucial to the American retirement system, providing participants with various strategies to spend their retirement assets. Before the SECURE 1.0 Act, insurance-based options within DC plans were limited, but the act, passed in late 2019, introduced fiduciary safe harbors that facilitate the selection of annuity providers. This regulatory change has led to a greater availability of insurance-based offerings in the market. However, the adoption of these strategies by plan sponsors has been slow as they become more familiar with annuities. This 20-page white paper outlines the current insured and non-insured options available for employer-sponsored retirement DC plans.

Source: Actuary.org, March 2025

IRAs Play an Increasingly Important Role in Saving for Retirement

The Investment Company Institute's latest research indicates that individual retirement accounts are increasingly important for retirement planning in the U.S. By mid-2024, 44 percent of U.S. households owned IRAs, a rise from 34 percent a decade earlier. The study, titled "The Role of IRAs in US Households' Saving for Retirement, 2024," provides insights into the characteristics and activities of households that own IRAs.

Source: Ici.org, March 2025

New Research Study Finds Auto-Enrollment, Auto-Escalation, Auto-Portability Can Substantially Reduce Likelihood That Today's Workers Will Run Short of Money in Retirement

The Employee Benefit Research Institute recently released a research study titled "ERISA and Auto Features: An RSPM Analysis of the Impact of Automatic Features on Retirement Security." The study reveals that the combined implementation of automatic enrollment, automatic escalation, and automatic portability significantly decreases the chances that today's workers will face financial shortfalls in retirement. This effect is especially pronounced for younger workers, who have several years of opportunity to participate in a defined contribution plan before reaching retirement age.

Source: Ebri.org, March 2025

Johns Hopkins Study: Private Equity, 401ks Do Not Mix

Recent research from Johns Hopkins Carey Business School raises concerns about the push for defined contribution plans to invest in private equity, particularly leveraged buyout funds. The study suggests that private equity may be riskier than the traditionally used publicly traded funds in 401k plans. Given that private equity funds involve pooling money from a limited number of investors to buy privately held companies with minimal public reporting, the report questions whether these investments align with the safety and transparency that workers typically expect from their retirement plans.

Source: Plansponsor.com, March 2025

2024 Defined Contribution Survey

The 2024 Defined Contribution Survey indicates a slight decrease in capital flows to real estate funds, with a drop of $700 million in 2023. Despite this decline, two-thirds of real estate investment managers reported net increases in flows from defined contribution plan investors. The overall net decline in capital flows was attributed to just one-third of firms. The survey, produced by NAREIM in collaboration with the DC Real Estate Council, NCREIF, and PREA, assesses inflows and redemptions related to private real estate vehicles, open-ended funds, and targeted strategies. By the end of 2023, over $36 billion of DC capital was invested in real estate strategies, as detailed in the 2024 survey.

Source: Nareim.org, March 2025

State of Retirement Planning: Fidelity Study

As more Americans approach retirement age in 2025, the latest Fidelity Investments State of Retirement Planning study reveals a growing sense of concern. While 67% of Americans in their planning years feel confident about their retirement, this is a decline of seven percentage points from the previous year, primarily due to ongoing inflation and rising living costs. Despite over 70% of recent retirees reporting that their retirement is proceeding as planned, many are surprised by increased expenses, especially in healthcare. The study, which has been conducted since 2019, compares the expectations and realities of individuals nearing retirement and those recently retired, highlighting the challenges faced during this critical period as a record number of Americans approach the traditional retirement age of 65.

Source: Thenewsmarket.com, March 2025

2025 Study on Advisor Attitudes Toward 3(16) Fiduciary Outsourcing

The "Advisor Attitudes Toward 3(16) Fiduciary Outsourcing" survey, conducted by Pentegra in January 2025, explored how over 50 advisors utilize fiduciary outsourcing to enhance retirement plan management for clients. It highlighted the benefits of outsourcing these responsibilities, such as improved compliance and risk mitigation for clients, while allowing advisors to concentrate on their core business operations. Carlo Guerrera, Vice President of Sales and Key Accounts, emphasized that outsourcing 3(16) fiduciary duties to professionals is considered a best practice that provides significant advantages to both advisors and their clients.

Source: Pentegra.com, March 2025

Vanguard Sees All-Time High Deferral Rates, Plan Design Improvements in 2024

Vanguard's preview of the "How America Saves 2025" report reveals that participant outcomes for defined contribution retirement plans remained strong in 2024. Key findings include a 10% increase in average account balances, largely due to positive market performance, and a record high of 45% of participants raising their deferral rates, either voluntarily or through automatic increases. Jeff Clark, head of defined contribution research at Vanguard, highlighted that plan designs are at their strongest, noting a consistent annual rise in the adoption of automatic enrollment over the past 20 years.

Source: Plansponsor.com, March 2025

2025 DC Survey: Plan Provider Service Ratings

Recordkeeper satisfaction among defined contribution plan sponsors is generally high, with an average Net Recommendation/Promoter Score exceeding 8 on a scale of 1 to 10, according to PLANSPONSOR's DC Survey. Jeff Cullen, CEO of Strategic Retirement Partners, notes that most of his clients are satisfied with their current providers and few are seeking alternatives. He emphasizes that "quality of service" and a "true partnership philosophy" are critical factors when choosing a recordkeeper. Cullen points out that variations in client experiences often stem from the quality of personnel assigned to their accounts, highlighting an area for potential improvement.

Source: Plansponsor.com, February 2025

Retirement Plan Participation, by Race/Ethnicity, 2023

This 6-page paper analyzes employment-based retirement plan participation data from the Current Population Survey, which started incorporating new retirement account variables in 2019. This data is beneficial because it focuses on individual workers rather than employers, allowing for a nuanced understanding of retirement participation based on worker characteristics. The study specifically explores variations in retirement plan participation among different racial and ethnic groups, while also considering how factors such as income, age, education, gender, and employer size influence these differences.

Source: Ebri.org, February 2025

DC Retirement Plan Balances and Contributions Rising, Fidelity Reports

Fidelity Investments reported that retirement account balances reached record highs in the latter half of 2024, with an average of $132,300 in 401ks and $119,300 in 403bs. Contribution rates are also rising, approaching Fidelity's 15% savings guideline. More than two-thirds of employees (69%) and employers (67%) view retirement plans as essential benefits. In 401k plans, the average total contribution is 14.1%, with employers contributing 4.7% and employees 9.4%. For 403b plans, the average total contribution is 11.8%, comprising 3.3% from employers and 8.5% from employees.

Source: Planadviser.com, February 2025

How Do Middle Class Americans Feel About Retirement?

Most middle-class Americans aspire to a long, fulfilling life and a comfortable retirement, which is integral to the American Dream. Representing about half of the U.S. population, the middle class is crucial for the economy, as consumer spending accounts for two-thirds of the U.S. GDP and drives growth. Insights into middle-class Americans' perceptions of retirement are highlighted in the 24th Annual Transamerica Retirement Survey, which explores their health, employment, finances, and outlook on retirement. This article reviews a few key findings from the survey.

Source: Spconsultants.com, February 2025

DC Retirement Plan Balances and Contributions Rising, Fidelity Reports

Fidelity Investments has reported record-high retirement account balances in the latter half of 2024, with the average 401k balance reaching $132,300 and the average 403b balance at $119,300. Contribution rates are also increasing, getting closer to Fidelity's recommended 15% savings rate (including both employer and employee contributions). According to Fidelity's 2025 workplace outlook report, 69% of employees and 67% of employers view retirement plans as essential benefits. In 401k plans, employers contribute an average of 4.7% of pay, while employees contribute 9.4%, totaling 14.1%. In 403b plans, employer contributions average 3.3%, and employee contributions average 8.5%, resulting in a total of 11.8%.

Source: Planadviser.com, February 2025

Study Finds Most Corporate Retirement Plans Have Regulatory or Fiduciary Violations

A study by Abernathy Daley 401k Consultants found that 84% of retirement plans exhibit at least one potential violation of ERISA that may expose them to regulatory risks or indicate fiduciary failure. Examining over 764,000 Form 5500 filings, the analysis identified "red flag violations" in two categories: regulatory infractions, which were present in 43% of companies, and egregious plan mismanagement, found in 76% of American companies. As a result, Abernathy Daley estimates that over 600,000 U.S. companies could face potential fines, legal penalties, and fiduciary issues.

Source: Planadviser.com, February 2025

American Views on Defined Contribution Plan Saving: 2024

The Investment Company Institute conducted a survey to track the actions and sentiments of retirement savers in the U.S. This report, the 17th in their series, is based on a nationwide survey of adults aged 18 and older, performed by NORC at the University of Chicago between November and December 2024. Findings reveal that Americans highly value 401k plans for their discipline and investment potential. Respondents generally oppose changes to the tax treatment or investment control of these accounts and prefer to maintain control over their retirement savings. Additionally, a majority expressed opposition to proposals that would require part of their retirement accounts to be converted into income guarantees managed by the government or insurance companies.

Source: Ici.org, January 2025

Understanding and Enhancing the Workforce Impact of Retirement Plans

Human capital is increasingly recognized as a vital source of competitive advantage, with retirement plans playing a crucial role in maximizing the value derived from this capital. This report emphasizes the importance of assessing retirement plans not only in terms of their costs and risks but also in their contributions to organizational success. To evaluate the impact of retirement plans, the report presents a comprehensive framework consisting of 10 key considerations framed as context-specific questions. The framework is intended to be action-oriented, helping organizations identify necessary changes, particularly for critical employee segments. The report includes case studies demonstrating successful implementations of the framework, highlighting potential risks associated with not adequately considering the impacts of retirement strategy changes.

Source: Soa.org, January 2025

Defined Contribution Plan Profile: A Close Look at ERISA 403b Plans, 2021

The BrightScope/ICI Defined Contribution Plan Profile is a research initiative by BrightScope and the Investment Company Institute that analyzes audited Form 5500 data from private-sector DC plans. It provides insights into DC plan design, including investment options, employer contributions, automatic enrollment features, and recordkeeping practices. The research draws from the BrightScope Defined Contribution Plan Database and includes analysis of employer contribution structures and associated fees, enhancing understanding of retirement savings. The current report focuses on ERISA 403b plans in 2021, examining data from the Department of Labor's 2021 Form 5500 Research File and nearly 6,300 audited plans in the BrightScope database.

Source: Ici.org, January 2025

PSCA Survey Finds Good News on 401k Savings and Participation Rates

In 2023, contribution rates for 401k plans saw modest increases as both employers and participants contributed more after a decrease the previous year. This information comes from the Plan Sponsor Council of America's 67th Annual Survey of Profit Sharing and 401k Plans, which analyzed the plan-year experience of 709 401k plans. While contributions are not yet back to the record highs of 2021, the uptick indicates a positive shift in participation and funding.

Source: Napa-net.org, December 2024

Top 10 Highlights from PSCA's Newest Survey of 401k Plans

In 2023, 401k plan contribution rates saw a modest increase as both employers and participants contributed slightly more than the previous year, although they have not yet returned to the record highs of 2021. This information is derived from the 67th Annual Survey of 401k Plans by The Plan Sponsor Council of America (PSCA). The survey indicates a rise in contributions, coinciding with plan sponsors focusing on the implementation of mandatory provisions from SECURE 2.0, along with decisions on optional provisions. Hattie Greenan, PSCA's director of research and communications, noted the dual focus of maintaining contributions while incorporating design features to support participant financial needs. This outlines the top 10 highlights from the survey.

Source: 401kspecialistmag.com, December 2024

Debt is Limiting American Retirement Savings

According to the 2024 Annual Retirement Study conducted by Allianz Life Insurance Company, a significant number of Americans are prioritizing debt repayment as they strive to secure their long-term financial goals. Notably, 55% of respondents are actively working to pay off debts, with Generation X leading this effort—64% of Gen Xers are focusing on debt reduction compared to 54% of both millennials and boomers. The article notes further that many Americans acknowledge that their debt is a barrier to retirement savings. Among those who wish they had saved more, 46% cite non-housing debts, such as car loans, credit cards, and student loans, as impediments to saving.

Source: Allianzlife.com, December 2024

2024 Defined Contribution Consultant Study

T. Rowe Price's fourth annual Defined Contribution Consultant Study gathered insights from the defined contribution consultant and advisor community regarding current retirement perspectives. The study, conducted from January 12 to March 4, 2024, involved 35 leading consultant and advisor firms, which together manage over $7.5 trillion in assets. Key findings continued to highlight areas such as target date solutions, retirement income, investment trends, and financial wellness programs. New topics introduced this year included managed accounts, alternative investments, and comparisons of active versus passive management strategies.

Source: Troweprice.com, November 2024

Schwab 401k Study: Employers Step Up to Help Workers Manage Financial Stress

The Charles Schwab 401k Study reveals that employers are increasingly taking proactive steps to assist employees in managing financial stress, particularly in the context of retirement savings. The study highlights a growing awareness among employers of the impact that financial difficulties can have on employee well-being, productivity, and overall job satisfaction. In response, many organizations are implementing resources and support systems, such as financial wellness programs and educational tools, to empower workers in their financial decision-making. The findings emphasize the significant role that employers play in fostering a supportive environment that promotes financial literacy and stability, ultimately benefiting both employees and the organizations they work for.

Source: Schwab.com, October 2024

GAO on 401k Plans: Reported Impacts of Fee Disclosure Regulations, and DOL Efforts to Support Implementation of Regulations

The GAO report emphasizes the significance of employer-sponsored 401k plans for retirement savings, highlighting the role of mandatory fee disclosures by the Department of Labor. Since 2012, 401k plan fees have generally decreased, with various factors -- including fee disclosures -- contributing to this trend. The DOL implemented fee disclosure regulations in 2010 and 2012 to enhance awareness among plan sponsors and participants regarding fees and investment performance. Overall, while fee disclosures have positively influenced the management of 401k plans, enhancing financial literacy among participants may further improve their engagement and understanding.

Source: Gao.gov, October 2024

4 in 10 Taking Early 401k Withdrawals; 2 in 3 Not Paying It Back

Research from FinanceBuzz reveals that 40% of Americans with retirement accounts have made early withdrawals, with over 10% doing so multiple times. Additionally, two-thirds of those who withdrew have not repaid the full amount. The study, based on a survey of 1,000 U.S. adults, aimed to examine the prevalence of early withdrawals, the amounts taken out, and the reasons behind these financial decisions.

Source: 401kspecialistmag.com, October 2024

Small Plan Balance Cashouts and Missing Participants

Plan sponsors often find managing missing participants and distributing plan balances a significant administrative challenge. While there are no strict regulations governing how to handle small balances from terminated employees, this issue is a common focus during DOL audits. The DOL expects plan sponsors to implement a prudent process and demonstrate a good-faith effort in distributing funds to ex-participants. To understand current practices, the PSCA conducted a survey in September 2024, sponsored by Inspira, gathering responses from 234 plan sponsors from various sizes and industries.

Source: Psca.org, October 2024

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