BOSTON, Mass. – Despite market volatility and an uncertain economic future, fewer than 5% of workers with retirement accounts through Fidelity Investments Inc. have taken advantage of CARES Act provisions allowing them to withdraw money without penalty, according to new research by Fidelity.
The research, which reflects data through the end of the third quarter of 2020, shows that 1.2 million people, or 4.6% of eligible employees on Fidelity’s workplace savings platform, have withdrawn from their retirement accounts since the CARES Act was signed into law at the end of March. The average withdrawal was $9,000 and the median was $2,400.
An even smaller percentage, 1.9%, borrowed money from their retirement accounts through the loan provisions of the CARES Act.
At the same time, most employees and employers continue to contribute to their retirements savings at the same rate as the prior quarter. Average balances ticked up slightly, mostly due market increases, across account types. Specifically, IRA average balances increased 6% quarter-over-quarter, while 401(k)s and 403(b)s saw a 5% bump.
Other findings included:
- Roth IRAs continue to increase in popularity and contribution dollars compared to a year ago, with 58% of IRA contributions made to Roth accounts compared to 54% a year ago, and a 37% increase in contribution dollars;
- More than 2 million people are saving through both a traditional 401(k) as well as an IRA, a 12.5% increase over a year ago with a 6% increase in average combined balances of both accounts;
- More than one-third of 401(k) and 403(b) plans offer a workplace managed account option, which is particularly important for Baby Boomers, 38% of whom have stock allocations higher than suggested for their age group.
Nancy Lavin is a staff writer for the PBN. Contact her at Lavin@PBN.com.
