The assets of 401(k) plans and of mutual fund target-date funds reached records in the quarter ended March 31, the Investment Company Institute reported Thursday in its quarterly review of retirement assets.
Assets of 401(k) plans rose to $4.75 trillion at the end of the quarter of 2016 vs. $4.65 trillion as of Dec. 31, the ICI reported. The asset gains were due to “positive investment returns” as well as to more contributions from employees and employers, Sarah Holden, ICI’s senior director of retirement and investor research, said in an interview. ICI could not determine what percentage of the increase was due to the market or to contributions.
Mutual fund-based target-date fund assets climbed to $790 billion as of March 31 vs. $763 billion three months earlier, the previous record.
DC plans accounted for $535 billion of these target-date fund assets — individual retirement accounts and other investors represented the rest — vs. $511 billion at the end of 2015.
Ms. Holden said target-date asset growth continues to be propelled by two factors — the target-date funds’ role as qualified default investment alternatives in plans employing auto enrollment and the willingness of participants to turn over their asset allocations to these professionally managed options.
Total retirement assets — overall DC assets, annuity reserves, IRAs, government defined benefit plans and private DB plans — rose slightly to $24.1 trillion as of March 31 vs. $24 trillion at the end of 2015. The only category experiencing a decline in assets was private DB plans, slipping to $2.8 trillion from $2.9 trillion during this period. Government DB plans were flat at $5.1 trillion, while overall DC assets increased slightly to $6.8 trillion from $6.7 trillion.