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401(k) Assets Prove Steady In Turbulent Times

Although the bear market is eating away at the estimated $1.8 trillion in assets held in 401(k) plans, those assets are generally more resilient to market volatility, making them highly prized by asset managers, observers say.

In seven of the 15 years between 1986 to 2000, 401(k) assets grew 25% annually. For the first time last year, however, those assets shrank by $72 billion-- primarily due to market performance, according to Cerulli Associates.

Still, 401(k) plans provide a steady stream of assets even when the economy is bad, said Cerulli analyst Josh Dietch. So far this year, plan participants have kicked in an estimated $40 billion in assets, roughly the same amount they did last year, he said.

Additionally, despite this year's market volatility, 401(k) transfer activity has been minimal, according to Hewitt Associates, a benefits consulting group based in Lincolnshire, Ill. For instance, the first day the market opened following the terrorist attacks on Sept. 11, transfer activity hit an all time high of .58% of total balances, a figure that does not represent "the vast majority of participants," said Lori Lucas, a defined contribution consultant with the firm. Of 1.5 million U.S. employees, the daily net transfer activity averages just .06% over the past 12 months, according to Hewitt.