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BruceM
Participant ○○

Retirement Plan Asset Distribution

Just finished reading my latest copy of PlanAdviser, which had the results of a study conducted on the nations retirement plans, their current size and distribution. I found it interesting, and thought it might be fun to pass it along here.

Here is the raw data from the study:

retirement plan assets distribution.jpg

And here's a pie chart of their relative sizes:

retirement assets pie chart.jpg

 

401(k)s are those administered by the large Third Party Administrators or their subsidiaries, and so does not include solo 401(k)s

457(b) plan include Government and Non-Profit 457(b) plans although they're managed differently. This does not include 457(f) (ineligible) plans

409(A) are deferred comp plans owned by the employer for the benefit of senior executives. I don't believe 457(f) plans were included here either.

The IRAs are Traditional and Roth and come from 2017 data from the Investment Company Institute through Statistica. I'm sure these numbers are larger than this today. Interesting note: about 70% of IRA balances are from rollovers, not contributions. In fact, according to this study, only 11% of IRAs receive contributions each year.

This list does not include amounts held in non-qualified annuity plans, defined benefit plans (private and public) or any amounts held in taxable accounts.

Just interesting info FYI

BruceM

12 Replies
Exactduke
Explorer ○

Re: Retirement Plan Asset Distribution

Interesting - I would have guessed those total dollar amounts reversed between IRA's & 401k plans.  

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Intruder
Participant ○○

Re: Retirement Plan Asset Distribution


@Exactduke wrote:

Interesting - I would have guessed those total dollar amounts reversed between IRA's & 401k plans.  


A lot of IRA assets consist of rollovers from qualified retirement and 401k plans of employees who have terminated/retired. I transferred assets in kind from my self employed qualified plan and employer 401k plan to an IRA to eliminate admin costs and greater selection of assets for RMDs. Many 401k plans charge admin fees to terminated participants. I always recommend that taxpayers transfer assets to an IRA because of 0 admin fees and ability to choose where distributions will come from. IRA allows owner to make transfers in kind to taxable account which is not an option in 401k plans. 

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ElLobo
Participant ○○

Re: Retirement Plan Asset Distribution


@BruceM wrote:

Just finished reading my latest copy of PlanAdviser, which had the results of a study conducted on the nations retirement plans, their current size and distribution. I found it interesting, and thought it might be fun to pass it along here.

Here is the raw data from the study:

retirement plan assets distribution.jpg

And here's a pie chart of their relative sizes:

retirement assets pie chart.jpg

 

401(k)s are those administered by the large Third Party Administrators or their subsidiaries, and so does not include solo 401(k)s

457(b) plan include Government and Non-Profit 457(b) plans although they're managed differently. This does not include 457(f) (ineligible) plans

409(A) are deferred comp plans owned by the employer for the benefit of senior executives. I don't believe 457(f) plans were included here either.

The IRAs are Traditional and Roth and come from 2017 data from the Investment Company Institute through Statistica. I'm sure these numbers are larger than this today. Interesting note: about 70% of IRA balances are from rollovers, not contributions. In fact, according to this study, only 11% of IRAs receive contributions each year.

This list does not include amounts held in non-qualified annuity plans, defined benefit plans (private and public) or any amounts held in taxable accounts.

Just interesting info FYI

BruceM


The interesting data, to me, is the average size of each.  At the maximum $150,292 for 409A, the deferred comp plan for senior executives, taking the traditional real, inflation adjusted 4% out each year means $500/month, chump change for retired senior executives, certainly a lot less than they will get from SS! 

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Intruder
Participant ○○

Re: Retirement Plan Asset Distribution

Lobo:

I don’t know how accurate the date on 409A is and what plans are included. Most SP 500 Co have stock option and stock purchase  programs for senior execs which provide $ millions in stock shares. A few years ago Jamie Diamond made a 1 day purchase of $ 27M in JPM stock when it unexpectedly dropped by $10 a share.

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CarlosDS
Participant ○

Re: Retirement Plan Asset Distribution

A more realistic way to estimate how people's defined contribution plans prepare them for retirement is to look at median plans values (IRAs, 401Ks, 403bs) as a function of age instead of average: (2015 survey):  

People in their 20s: $16,000

People in their 30s: $45,000

People in their 40s: $63,000

People in their 50s: $117,000

People in their 60s: $172,000

Source:  Transamerica Center for Retirement Studies. LINK

 

 

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ElLobo
Participant ○○

Re: Retirement Plan Asset Distribution


@CarlosDS wrote:

A more realistic way to estimate how people's defined contribution plans prepare them for retirement is to look at median plans values (IRAs, 401Ks, 403bs) as a function of age instead of average: (2015 survey):  

People in their 20s: $16,000

People in their 30s: $45,000

People in their 40s: $63,000

People in their 50s: $117,000

People in their 60s: $172,000

Source:  Transamerica Center for Retirement Studies. LINK

 

 


Good stuff,Carlos.  Thanks.  Still, the average retiree who goes out before age 70 can still expect chump change, at $573/month, $6,880/year which, for a normal 2000 hours/year work time, would correspond to a $3.44/hour working wage!

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BruceM
Participant ○○

Re: Retirement Plan Asset Distribution


@Intruder wrote:

Lobo:

I don’t know how accurate the date on 409A is and what plans are included. Most SP 500 Co have stock option and stock purchase  programs for senior execs which provide $ millions in stock shares. A few years ago Jamie Diamond made a 1 day purchase of $ 27M in JPM stock when it unexpectedly dropped by $10 a share.


Most ISO, NQSO and RS plans are not part of an employee's deferred comp plan, but are treated as stock based compensation subject to employment tax in the year they are exercised/sold, exercised or vested. Now, they may be deferred to later years after separation, and so would fall under the rules of 409(A).

I think the reason for such a seemingly small number is that large employers will offer deferred comp to middle level employees as a sort of retention tool. Intel for example offers their SERPLUS to fairly junior employees with a max of, as I recall, 5% of salary deferred to the plan. Thus there may be a lot of small accounts pulling the average down....but that's a guess.

But those are the numbers this study reported. I'd give you the link to it but its requires membership.

BruceM

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BruceM
Participant ○○

Re: Retirement Plan Asset Distribution

 
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yogibearbull
Contributor ○○○

Re: Retirement Plan Asset Distribution

There may be several reasons to keep money in the plan:

1. Better protection from creditors and in bankruptcy.

2. Low-costs, access to institutional classes, access to special funds [incl SVs] in good plans.

3. No penalty withdrawals between 55-59.5 for early retirees.

My Fido 403b has all Fido options, and TIAA 403b has all TIAA options, and that is plenty of choices. 

 

YBB
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wayoutwest
Participant ○

Re: Retirement Plan Asset Distribution

Bruce, thanks for posting. As Intruder brought up, I rolled my 457 and one 403b into an IRA. The best thing about the 457 was a stable value fund but I wanted more options and easier administration. On the 403b, I did a wholesale in-kind rollover including two closed funds (since sold) and there are plenty of good/better choices. I still have a a 403b at Price because I can buy any fund there. I am satisfied with IRA state protections in a bankruptcy...a low probability event.

I too was surprised by the low balances, even when broken out by age group. This echos Morningstar's podcast, Married Couples Are in the Retirement Danger Zone, which states: "The last time we had a comprehensive survey that showed both balances in 401(k)s, and in IRAs together, the median household covered by a retirement plan, approaching retirement and had a balance of $135,000. So that was for 2016. We're going to get a new survey in 2019 and maybe that goes up to $150,000."

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sugarhill6
Explorer ○

Re: Retirement Plan Asset Distribution

Isn't there a 10% penalty for taking money out of an IRA prior to turning 59 1/2, making it harder to retire early?   In a 401(k), if I chose to retire at 56, my withdrawals would be penalty free?   Also, at 70 1/2  I must take RMDs in my IRA even though I may be still employed.  If still employed, RMDs are delayed in my 401(k).

Please correct my logic above if wrong...   ....but 401(K)s seem to have more flexibility.   Fees are small.  

 


@Intruder wrote:

@Exactduke wrote:

Interesting - I would have guessed those total dollar amounts reversed between IRA's & 401k plans.  


A lot of IRA assets consist of rollovers from qualified retirement and 401k plans of employees who have terminated/retired. I transferred assets in kind from my self employed qualified plan and employer 401k plan to an IRA to eliminate admin costs and greater selection of assets for RMDs. Many 401k plans charge admin fees to terminated participants. I always recommend that taxpayers transfer assets to an IRA because of 0 admin fees and ability to choose where distributions will come from. IRA allows owner to make transfers in kind to taxable account which is not an option in 401k plans. 


 

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Intruder
Participant ○○

Re: Retirement Plan Asset Distribution


@sugarhill6 wrote:

Isn't there a 10% penalty for taking money out of an IRA prior to turning 59 1/2, making it harder to retire early?   In a 401(k), if I chose to retire at 56, my withdrawals would be penalty free?   Also, at 70 1/2  I must take RMDs in my IRA even though I may be still employed.  If still employed, RMDs are delayed in my 401(k).

Please correct my logic above if wrong...   ....but 401(K)s seem to have more flexibility.   Fees are small.  

 


@Intruder wrote:

@Exactduke wrote:

Interesting - I would have guessed those total dollar amounts reversed between IRA's & 401k plans.  


A lot of IRA assets consist of rollovers from qualified retirement and 401k plans of employees who have terminated/retired. I transferred assets in kind from my self employed qualified plan and employer 401k plan to an IRA to eliminate admin costs and greater selection of assets for RMDs. Many 401k plans charge admin fees to terminated participants. I always recommend that taxpayers transfer assets to an IRA because of 0 admin fees and ability to choose where distributions will come from. IRA allows owner to make transfers in kind to taxable account which is not an option in 401k plans. 


 


10% Penalty can be avoided by taking an annual substantially equal periodic payment from the IRA for 5 years, e,g., 55 to 60.

401k plans are not required to defer distributions for active employees who continue to work after 70 1/2 . Plan can require that RMDs commence at 70/1/2.

 

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