Fidelity: DC participants held steady despite drop in assets in Q1

Defined contribution plan assets among Fidelity Investments' clients plunged during the first quarter, but the company said participants, on average, maintained a steady rate of contributions to their accounts and didn't make "drastic changes" in their asset allocation.

"It was encouraging to see that many investors stayed the course and did not make drastic changes to their asset allocations, with some investors increasing contributions to their retirement accounts," said Kevin Barry, president of workplace investing, in a news release Friday.

Among corporate 401(k) plan participants in Fidelity record-kept plans, the average contribution rate was 8.9% for the first quarter, matching the rate in the fourth quarter.

Within that first-quarter group, 15% increased their contributions in the first quarter, due to individual choices as well as to participation in auto-escalation programs.

The average first-quarter 2020 retirement account balance was $91,400, down from $112,300 for the fourth quarter of 2019 and $103,700 for the first quarter of 2019. The results are based on 23,000 corporate 401(k) plans covering 18.3 million participants. The data include adviser-sold plans but exclude tax-exempt plans.

Fidelity reported that 7.3% of participants made a change to their asset allocation during the first quarter vs. 5.2% in the fourth quarter, a difference that the company said wasn't significant. Of those making first-quarter changes, 60% made just one change.

Among 403(b) plan and other tax-exempt plans, contribution rates rose to 6.9% in the first quarter of 2020 vs. 5.6% in the fourth quarter of 2019 and 5.4% in the first quarter of 2019.

The average account balance for these plans fell to $98,900 in the first quarter vs. $115,400 in the fourth quarter and $107,100 in the first quarter of 2019. The results are from 10,447 plans — including 403(b), 401(a), 457(b) and 401(k) — covering 4.98 million individuals with a total of 6.6 million accounts.

Fidelity reported that 5.2% of participants in these plans made an allocation change in the first quarter of 2020, declaring that this was a "slight increase" from the 4.1% in the fourth quarter of 2019.

Also, Fidelity said that only 3% of participants in all plans — 401(k), 403(b) and other tax-exempt accounts — cut their equity allocation to zero.