Vanguard reports record 401(k) balancesNews added by Benefits Pro on February 6, 2014

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By Dan Berman

The average defined contribution account balances of plan participants soared 18 percent last year to a record average of $101,650, Vanguard reported.

With last year’s rising stock prices and higher interest rates, Vanguard’s numbers may well be a harbinger of how other 401(k) account fared.

“Vanguard’s numbers are a good proxy,” said Rick Meigs, president of 401(k), a Portland, Ore.-based website that provides information to retirement professionals. “They have a huge number of platforms and participants. These are good numbers for 2013. We’ll see what this year brings.”

Vanguard, which has been tracking the plans it administers since 1999, found several trends that emerged last year:
  • Automatic enrollment of employees is on the rise. Among companies with more than 1,000 participants, 60 percent did so. The figure was 34 percent among all employers.

  • The use of professionally managed investment options within 401(k) plans continues to rise. Forty percent of Vanguard participants now use one of these options, which include target-date funds, other balanced funds, and a managed account program.

  • More than half of all plans, 52 percent, offer a Roth 401(k) option. Growth is fueled by smaller plans. Larger plans were early adopters of the feature.

  • In 2013, 60 percent of participants proactively contacted Vanguard via phone or the web about their plan account, compared with 53 percent 10 years ago.

  • The number of participants who have an outstanding loan (18 percent) or who took a withdrawal (4 percent) remained steady over 2012.

  • Of the participants who left their company’s employment, an increasing number–85 percent compared to 82 percent five years ago–kept their money in their plan accounts, thus preserving those assets for retirement.
Vanguard, headquartered in Valley Forge, Pa., is one of the world’s largest investment management companies with more than $2.2 trillion in U.S. mutual fund assets under management.

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