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Retirement Assets Continue Upward Trend in Q1

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First-quarter retirement assets increased 1.3% to $24.9 trillion, the Investment Company Institute reported on Wednesday. Retirement assets now account for 36% of all household assets.

Assets have been increasing slowly but surely since the second quarter of 2012, when total retirement assets in the United States were $19.2 trillion and accounted for 34% of household assets.

Most of those assets are in individual retirement accounts. IRA assets increased more than 2% in the first quarter to $7.6 trillion. Defined contribution assets increased a more modest 1.8% to $6.8 trillion.

The most recent data that ICI provided for IRA assets by type of IRA was from year-end 2014. Traditional IRAs took a large majority, with $6.4 trillion at the end of 2014. Roth IRAs held $550 billion.

Most DC assets are held in 401(k) plans — $4.7 trillion, according to the report. The next most popular plan type were 403(b) plans, which held $875 billion in assets, followed by $570 billion in “other” private-sector DC plans, $437 billion in the Federal Thrift Savings Plan (TSP) and $265 billion in 457 plans.

Over half of the assets in DC plans — 56% — are invested in mutual funds. By comparison, 48% of assets in IRAs are invested in mutual funds.

ICI found that target-date mutual funds account for $741 billion, largely in retirement accounts: 88%. Almost $500 billion of those assets were in DC plans, with another $156 billion in IRAs. Index funds account for 31% of employer-sponsored DC plan assets, and 16% of IRA assets.

Defined benefit plans held more than $8 trillion in assets. Public pensions account for over $5 trillion after falling 0.5%, the only asset type to see a decline. Private pensions increased very slightly to $3.2 trillion.

Annuity reserves also increased to $2.1 trillion.

Private DB plans paid out $197 billion while taking in $128 billion in contributions in 2012, the most recent data on outflows provided by ICI. Private DC plans paid $316 in distributions, and took in nearly $329 billion.

Check out Why ETFs Can’t Crack the Retirement Market on ThinkAdvisor.


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