Participant Retirement Assets Remaining In Plan Have Increased

Vanguard research on participant’s retirement distribution decisions in defined contribution plans over time revealed the emerging trend.

Defined contribution retirement plan participants are increasingly remaining in the plan, after terminating employment, new data shows.

The Vanguard research, Retirement Distribution Decisions Among DC Participants, analyzed proprietary recordkeeper data on the account distribution decisions made by participants from January 1, 2011, through December 31, 2021.

Several significant implications for employers emerged from the research, says David Stinnett, principal and head of strategic retirement consulting at Vanguard, via email about the findings of a longitudinal study the firm completed using data on plans for which Vanguard is recordkeeper.

“We are seeing a trend recently that more retirement age participants are staying in their DC [defined contribution plan],” says Stinnett, “In terms of plan distribution behavior, 29% of participants in the 2021 cohort remained in the plan with no installments—versus 3% in the 2011 [termination year]—and only 38% of participants rolled over to an IRA—versus 57% for the 2011 [cohort].”

Plan sponsors’ rules for allowing participants partial distributions have a significant effect on workers willingness to have assets remain in the employer’s retirement plan, according to the Vanguard research.

“When participants are permitted to have ad hoc distributions, they appear to be more inclined to stay [in their retirement plan] which may be a result of growing withdrawal flexibility and supports strategies for a ‘through’ glide path,’” adds Stinnett.

Employers with rules that allow participants to take partial distributions of assets retained 25% more assets and 20% more participants in the plans, when ad hoc partial distributions were permitted, Vanguard data shows.

For the 2016 termination year cohort, researchers analyzed participants in plans that allowed partial distributions separate from participants that did not, Vanguard data shows.

In the 2016 cohort, five years after termination, 23% of participants and 38% of assets remained in plans allowing partial distributions, compared with 19% of participants and 28% of assets for plans that did not, which suggests that not allowing partial distributions is a factor leading participants to leave their employer’s plan, according to the research.

“Plan sponsors may want to consider how to create an optimal plan design, coupling cost-effective advice, institutional pricing and on-going fiduciary oversight with retiree friendly components [such as] ad-hoc distributions,” says Stinnett.

Vanguard finds 37% of its’ recordkeeper clients’ plans allowed terminated participants to take ad hoc partial distributions, and the adoption of the feature is increasing, with the percentage of plans allowing these distributions nearly doubling from 19% in 2016, data shows.

“These findings have implications for both the ‘to versus through’ glide path conversations for participants in target-date funds and also an increasingly higher demand for plan sponsors to implement retirement income solutions,” adds Stinnett. “The fact that [seven] in 10 participants preserved their assets, either in an IRA or employer plan account, supports a ‘through’ glide path discussion and assumes that participants will remain invested into retirement.”

The feature is more common with larger plans, as nearly three in four plans with 5,000 or more participants allow partial distributions and as a result 72% of participants were in plans that allowed ad hoc partial distributions in 2021, up from 41% in 2016.

The research also found key trends emerging for retirement plan participants and assets:

  • Nearly 70% of retirement-age plan participants ages 60 and older and terminating from their employer have preserved their savings in a tax-deferred account, the data shows and in total, 90% of retirement dollars are preserved, either in an IRA or employer plan account.
  • The 30% of retirement-age participants who cashed out from their employer’s retirement plan over five years typically had smaller balances, with the average amount cashed out totaling approximately $39,700, whereas participants preserving assets had average balances ranging from $239,300 to $418,900.


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The Vanguard analysis is based on proprietary data from the firm’s DC recordkeeping clients from January 1, 2011, through December 31, 2021. The research examined the plan distribution behavior through year-end 2021 of 504,400 participants ages 60 and older who terminated employment in calendar years 2011 through 2020. The average before-termination account balance of participants in the sample ranged from $153,200 to $203,000, depending on the termination year cohort.