Although employers have a choice as to the type of retirement plan they offer, 401(k) plans have clearly established themselves as the flagship retirement savings vehicle. With roughly $6 trillion in assets and totaling more than 575,000 plans, 401(k)s dwarf other defined contribution (DC) plan types and long ago surpassed their private defined benefit (DB) plan counterparts. As the market has grown, it has become somewhat defined by its imbalanced extremes: 92% of all 401(k) plans each have less than $10 million in assets, while the top 0.12%—i.e., the 732 largest plans, each having over $1 billion in assets—control 51% of 401(k) assets.
The opportunities and challenges that arise from such fragmentation have resulted in different servicing strategies. Small-plan sponsors may value the “high-touch” experience offered by smaller providers, while large-plan sponsors likely demand high-tech platforms capable of efficiently servicing the thousands of participants enrolled in their plans.
While it seems unlikely that the 401(k) plan’s dominance will be challenged anytime soon, providers are continuing to innovate in response to a changing market. A decade of legal challenges has heightened sponsor awareness of fiduciary practices, leading providers to improvements in regulatory and compliance services, cybersecurity initiatives and fee transparency. —BOK
Growth in Total 401(k) Plan Assets ($MM)
Total 401(k) Assets, Plans and Participants
|Plan Size||Assets ($mm)*||Plans*||Participants*|
|$10mm – $50mm|
|>$50mm – $200mm|
|*Not all providers report complete data; therefore, data segmented by plan size will not equal the corresponding overall total.|