Covid didn’t change 401(k) saving habits, ICI says

Just 2.3% of participants in defined-contribution plans stopped contributing to the plan in 2020 amid the pandemic.

Only 2.3% of participants in defined-contribution plans stopped contributing to their 401(k) plans in 2020, according to record-keeper data gathered by the Investment Company Institute.

“That is consistent with activity in the majority of the prior 12 years for which ICI has tracked these data,” the trade group said in a release.

In 2019, for example, 2.3% of participants stopped contributing, as did 3.4% in 2009, another time of financial stress.

Withdrawals from DC plans remained at a low level last year, with 3.8% of plan participants taking withdrawals, which was similar to the 3.9% who did so in 2019 and 3.1% in 2009.

The withdrawals in 2020 did not include coronavirus-related distributions. The surveyed record keepers identified 5.8% of DC plan participants as taking CRDs during 2020. The Coronavirus Aid, Relief, and Economic Security Act, known as the CARES Act, enacted March 27, 2020, provided increased flexibility for retirement plan savers, including penalty-free withdrawals, through Dec. 30 for individuals affected by COVID-19.

ICI said that about one in 10 DC plan participants changed the asset allocation of their account balances.

[More: Covid’s financial pinch worse than the Great Recession’s, survey finds]