2023 report features the latest trends in 401(k) plan design
and participant behavior
BALTIMORE, April 8,
2024 /PRNewswire/ -- T. Rowe
Price, a global investment management firm and a leader in
retirement, today published its annual benchmarking
report on 401(k) plan design and participant behavior, and
found average account balances increased by 14% to $115,000, aided by strong performance in the
financial markets. This is the second highest average the firm has
seen in 10 years, just below the $124,000 high in 2021. Gains were especially
strong among participants aged 20-29, who experienced an increase
of 27%.
Meanwhile, 401(k) plan participation saw a decline from 66% in
2022 to 63% in 2023. Participation remains significantly higher in
plans with auto-enrollment compared to plans without it (83% versus
36%, respectively), underscoring the importance of auto-solutions
like auto-enrollment and auto-increase.
"We've seen first-hand how simple 401(k) plan features like
auto-solutions can significantly drive positive savings behavior,"
said Francisco Negrón, head of Retirement Plan Services at T.
Rowe Price. "T. Rowe Price is dedicated to helping advisors and
plan sponsors design plans that set up their employees for success,
instill financial confidence, and put them on the path toward
better retirement outcomes."
Additional key findings include:
- Plan adoption of Roth contributions reached an all-time
high of 93% in 2023, and 14% of participants made Roth
contributions.
- The average employee deferral rate remained steady from
2022 to 2023 at 8.4%.
- Participants invested their contributions in a target
date product more than any other investment type in 2023. Those
who invested 100% in a target date product were 27 times less
likely to make an exchange.
- The volume of exchanges among investment options has
remained relatively stable since 2018, even during the highest
period of volatility in 2020 when 2.5% of participants made
one.
- Participants aged 72 and older took 12.9% fewer
distributions in 2023 compared to 2022, likely related to
SECURE 2.0 legislation, which changed the starting age for Required
Minimum Distributions from 72 to 73.
- Hardship withdrawals increased across all age groups from 2022
to 2023. Participants in their 50s experienced the biggest increase
in both average hardship size and quantity.
The annual benchmarking report, Reference Point, is based on the
firm's full-service 401(k) recordkeeping client data for 2023.
ABOUT T. ROWE
PRICE
Founded in 1937, T. Rowe
Price (NASDAQ: TROW) helps individuals and institutions around
the world achieve their long-term investment goals. As a large
global asset management company known for investment excellence,
retirement leadership, and independent proprietary research, the
firm is built on a culture of integrity that puts client interests
first. Clients rely on the award-winning firm for its retirement
expertise and active management of equity, fixed income,
alternatives, and multi-asset investment capabilities. T.
Rowe Price has $1.51 trillion in assets under management as of
February 29, 2024, and serves
millions of clients globally. News and other updates can be found
on Facebook, Instagram, LinkedIn, X, YouTube,
and troweprice.com/newsroom.
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SOURCE T. Rowe Price Associates, Inc.