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Retirement Planning > Retirement Investing

Few plan participants are dipping into retirement accounts

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Withdrawals from defined contribution plans remained low in the first half of 2013, according to a new report.

The Investment Company Institute (ICI) discloses this finding in “Defined Contribution Plan Participants’ Activities, First Half of 2013.” The November report updates results from ICI’s survey of a cross section of recordkeeping firms representing a broad range of DC plans and covering about 24 million employer-based DC retirement plan participant accounts as of June 2013.

The report reveals that just 2.1 percent of DC plan participants have taken withdrawals in the first half of 2013, the same pace as in the first half of 2012. Hardship withdrawal activity also remained low: Only 0.98 percent of DC plan participants have taken hardship withdrawals during 2013, the same share as in 2012.

The report further shows that 25 percent of U.S. retirement assets are DC plan assets, including 401(k) plans ($3.8 trillion), other DC plans ($1.5 trillion) and individual retirement accounts ($5.7 trillion). Accounting for the balance of U.S. retirement assets in the second quarter are private defined benefit plans ($2.8 trillion), federal, state and local pensions ($5.2 trillion) and annuities ($1.8 trillion).

Total retirement assets in the second quarter come to $20.9 trillion, up from $20.7 trillion in the first quarter of 2013 and $19.9 trillion at year-end 2012.

“The withdrawal and contribution data indicate that essentially all DC plan participants continued to save in their retirement plans at work,” the report states. “In 2013, only 1.5 percent of DC plan participants stopped contributing, compared with 1.6 percent in 2012 and 1.6 percent in 2011.

The report adds that plan participants benefited from risky stock prices, as reflected in the S&P 500 total return index, which is up 13.8 percent year-to-date. The double-digit gain compares with a rise of 6 percent and 9.5 percent, respectively, in the second and first half of 2012.


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