Even before President Donald Trump rattled stock and bond markets with his mass tariff policy, 401(k) participants were trading at a pace not seen in more than four years, according to Alight.
During the first quarter of 2025 — which ended March 31 just before the tariffs were announced — Alight reported that account balance trading was the highest since the third quarter of 2020.
“Volatility on Wall Street made for high trading activity” in retirement plans during the first quarter of 2025, said a report about the Alight Solutions 401(k) index, posted on the company’s website. The index is based on 401(k) trading activity of more than 2 million people with more than $200 billion in collective assets.
The report said 0.77% of balances was traded during the first three months of 2025. Of the 60 trading days, 29 experienced above-normal trading.
According to Alight’s methodology, normal trading “is when the net daily movement of participants’ balances, as a percent of total 401(k) balances within the Alight Solutions 401(k) Index, equals between 0.3 times and 1.5 times the average daily net activity of the preceding 12 months.”
High trading occurs when the “net daily movement exceeds two times the average daily net activity,” Alight said. Moderate trading is when the net daily movement is between 1.5 and 2 times the average daily net activity of the preceding 12 months.
During the first quarter, asset classes with the most trading outflows were target-date funds (73% of outflows) and U.S. large-cap equity funds (21%).
Leading sources of inflows were bond funds (33%); stable value funds (25%) and money market funds (18%).
As has often been the case, the target-date fund outflows were more than offset by contributions. During the first quarter, target-date outflows totaled $1.5 billion but contributions were $2.7 billion.
