Eighty-one percent of participants in Bank of America Merrill Lynch-administered 401(k) plans started or increased contributions during the fourth quarter of 2012, a 5% increase over the fourth quarter of 2011, the company announced Thursday.
Kevin Crain, managing director and head of institutional retirement and benefits services, said in an interview that the increase was due to a better economy than in previous years and to sponsors spending more time with participants discussing savings.
Every fourth quarter, Mr. Crain added, the ratio of positive actions — starting or increasing contributions — rises in relation to negative actions — participants reducing or stopping contributions. The improvement is due to companies’ open enrollment periods.
For all of 2012, Bank of America Merrill Lynch said 77% of participants took a positive action, up 6% from 2011, according to the company’s quarterly 401(k) Wellness Scorecard report issued Thursday.
The report said the number of new loans by participants from 401(k) accounts dropped to about 123,000 last year, the lowest level since the company began tracking loans in 2009, Mr. Crain said. The loan number peaked at about 140,000 in 2010 and slipped to about 130,000 in 2011.
Mr. Crain said the decline was due to an improving economy and to sponsors doing more work to educate participants about the long-term impact of loans and withdrawals.
The company’s 401(k) scorecard said the number of hardship and in-service withdrawals fell to about 170,000 last year, down from a peak of about 184,000 in 2011 — but still above the 149,300 in 2010 and 138,100 in 2009.
Bank of America Merrill Lynch’s quarterly 401(k) scorecard is based on client data covering plans with $98.1 billion in assets and 2.5 million participants that have 401(k) balances.