A total of $150 billion in rollover contributions was made last year, but defined contribution plan providers retained only 21%, or $32 billion, according to a report from Cerulli Associates. The amount lost to providers was a record high, despite the increase in overall rollover assets that reversed a three-year decline, Cerulli said. The proportion of cash-out DC distributions remained roughly unchanged at 20% since Cerulli's last measurement four years ago.
Providers' losses were attributed to problems with retention strategies linking institutional and retail platforms for services and products, the report said.
"Direct-sold mutual fund companies and broker-dealers are experiencing the greatest success at retention," according to the report. "Mutual fund companies only hold 44% of the 401(k) marketplace but represent 66%," or $22 billion, of retained rollover assets. "Broker-dealers only represent 7% of the 401(k) arena but hold 14% of retained rollover assets." Third-party administrators, which represent 29% of 401(k) assets, account for 5% of retained rollover assets.
Some $1.9 trillion will be rolled over from qualified plans to IRAs from this year through 2010, the report estimates.