401(k) Industry Snapshot
The 401(k) plan is the largest workplace savings vehicle and now accounts for more than, on average, 65% of all defined contribution (DC) plans, participants and assets, but the market is far from uniform. Almost 90% of 401(k)s each have less than $5 million in assets, but these plans account for less than 20% of 401(k) participants and less than 10% of 401(k) assets. Stated differently, the 647 largest 401(k)s—i.e., those that have over $1 billion in assets—control 49% of 401(k) assets and nearly 33% of all participants.
Not surprisingly, the industry has evolved to cater to the needs of plans both large and small, with larger plans more likely to be sold direct and smaller plans typically sold and serviced through retirement plan advisers, who offer added value to sponsors lacking the knowledge or time to maintain their plan.
Overall, fiduciary concerns are driving a more expansive review of 401(k) provider capabilities. Sponsors have always taken an interest in service offerings related to potential administrative headaches such as compliance testing and Form 5500 preparation and filing. But many requests for proposals (RFPs) now explore other areas of fiduciary importance, including fiduciary outsourcing options, cybersecurity protocols and disclosure of ancillary business revenue that might be connected to plan administration. —BOK
Growth in Total 401(k) Plan Assets ($mm)
Share of Total Defined Contribution Market
401(k) plan assets
401(k) plan participants
|By Plan Size||Assets ($mm)*||Total*||Participants*|
|$5mm – $25mm||$492,559||53,323||9,567,701|
|>$25mm – $100mm||$453,242||13,528||8,018,188|
|>$100mm – $500mm||$727,704||3,821||10,467,575|
|† Not all providers report complete data; therefore, data segmented by plan size will not equal the corresponding overall total.|