Contributions to the 30 million retirement accounts held at Fidelity Investments held steady in the third quarter, but the pandemic drove retirement account withdrawals under the CARES Act for employees facing an immediate financial need, the company said in a release covering an analysis of its retirement accounts.
From March to the end of the third quarter, 1.2 million individuals had taken a CARES Act distribution from their retirement account, which represents 4.6% of eligible employees on Fidelity’s workplace savings platform, the company said. In the third quarter, the overall average withdrawal amount was $9,000, while the median withdrawal amount was $2,400.
Fidelity found that the average IRA balance was $117,700, a 6% increase from the second quarter and 7% higher than the $110,200 of a year ago. The average 401(k) balance increased to $109,600, a 5% quarterly increase and 4% higher year over year. The average 403(b) account balance increased to $96,100, up 5% and 9%, respectively.
Fidelity also found that employee and employer contributions remained steady, as did the total savings rates for 401(k) and 403(b) accounts, at 13.5% and 10.6%, respectively. The latter rate combines employer and employee contribution rates.
From the third quarter of 2019 to the third quarter of 2020, 58% of all contributions to individual retirement accounts went to Roth IRA accounts, up from 54% for the same period a year earlier. And overall, the number of Roth IRA accounts that received a contribution grew 35%.
Total IRA contribution dollars, across all types of IRA accounts, increased 37% during the same period, Fidelity said.
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As our second lead editor, Cindy Hamilton covers health, fitness and other wellness topics. She is also instrumental in making sure the content on the site is clear and accurate for our readers. Cindy received a BA and an MA from NYU.