Fidelity recently reported the highest accounts balances ever — $75,900 — in the 12 years it has been tracking that metric. This is up 4.2% from the previous quarter, and represents an increase of 18% over a five-year period. During that period, deferrals grew 7.3% and matches increased 19%, with more money going into asset allocation funds (36% versus 20%), less going into equities (46% versus 62%) and no change for conservative investments. (Note that although Fidelity has significant market presence — with 12 million participants and over 20,000 plans — they tend to service larger plans and their metrics may not apply to the smaller plan market.)
With the market down a bit over the last five years, these gains are the result of better plan design — auto enrollment features in particular have had dramatic effects on DC plans like 401(k)s. But we still have a ways to go, as evidenced by the fact that participants who are not auto-enrolled defer 8.4%. This is because most plans, following safe harbor proscriptions, start their auto-enrolling at 3%. Click here for our recent item on creating the ideal 401(k) plan.
