Fidelity Finds Millennial 401(k) Account Balances at Record Levels

Fidelity’s latest retirement analysis reveals its customers have increased their 401(k) balances on average and its Millennial account holders are making record savings.

The average 401(k) account balance for Fidelity customers rose to $88,900 at the end of the second quarter of 2016 signaling an increase of nearly 2% from the end of quarter one, according to the company’s latest retirement savings analysis. The average account balance for its customers’ individual retirement accounts (IRA)s increased to $89,700 at the end of Q2 2016. That figure increased from $89,300 at the end of Q1 2016.

Despite this growth, however, retirement account balances for Q2 2016 decreased when compared to the levels reported in Q2 2015. The average 401(k) balance at the end of Q2 2016 fell 2.5% from Q1 2015. The average IRA balance at the end of Q2 2016 was 7% lower than it was at the closing of Q2 2015.

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The analysis also found that the average 401(k) balances of Millennial account holders rose to record levels. The average balance for Millennials who have been continuously active in their 401(k) plans for 10 years reached a record $92,900 at the end of Q2 2016, an increase of nearly 10% from $84,700 one year ago, Fidelity reported. The overall balance for long-term savers reached $241,300 at the end of Q2 2016, up from $231,500 one year ago.

The company’s findings also revealed that more people are embracing digital tools when it comes to managing their retirement savings. More than 400,000 people tapped Fidelity’s online guidance for information about a wide range of financial topics including increasing savings, establishing emergency funds, and taking advantage of Social Security benefits. In addition, more than 225,000 people completed Fidelity’s interactive money checkup which analyzes an individual’s financial needs and offers guidance.

The percentage of Fidelity customers with all of their 401(k) assets in a target-date fund or managed account topped 45% at the end of Q2. These investors were less likely to react to market swings and economic events—among savers with all of their 401(k) savings in a target-date fund, only 1% made an investment change within their 401(k) over the past 12 months, compared to 13% of 401(k) investors taking a “do it yourself” approach to retirement savings. 

“Most retirement savers are accustomed to market volatility, but the swings in the second quarter were especially dramatic, including a 600-point drop followed by a nearly 800 point increase,” says Doug Fisher, senior vice president of Workplace Investing at Fidelity Investments. “It can be tempting for investors to have a knee-jerk reaction to market volatility, so it’s encouraging that more people are tapping professional guidance to help keep their retirement savings and investing on track.” 

Trustee and Counsel for Union Found Guilty of Retaliation

The case stemmed from the activities of workers who reported on the trustee’s interference with collections and contributions from unionized employers.

The U.S. District Court for the Central District of California found that the trustee for the Cement Masons Southern California Trust Funds Scott Brain and trust counsel Melissa Cook violated sections 510 and 404 of the Employee Retirement Income Security Act (ERISA) when they caused the firing of Cheryle Robbins and Cory Rice. Robbins and Rice, both of whom served the trust funds, filed an internal complaint regarding wrongdoing by Brain as a trustee and cooperated with a federal criminal investigation. 

A Department of Labor (DOL) news release says that after a five-day trial, the court ruled that Brain, Cook and her firm violated ERISA by suspending and then discharging Robbins, and discharging Rice, because they participated in a complaint against Brain’s unlawful conduct to the General President of the Operative Plasterers’ and Cement Masons’ International Association, and because Robbins cooperated in a federal criminal investigation of Brain.

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The court ordered the permanent removal of Brain as a trustee. It also ordered the permanent barring of Brain, Cook and her law firm from serving the Cement Masons Southern California Trust Funds. In addition, the court ordered Cook and her law firm to repay all attorneys’ fees she billed the trust funds for the actions she took in retaliating against whistleblowers Robbins and Rice.

The decision follows the DOL’s August 2015 success in obtaining $630,000 in lost wages and damages for Robbins, Rice and another worker victimized by Brain and Cook.

NEXT: The case

The case stemmed from the activities of workers who reported on Brain’s interference with collections and contributions from unionized employers. In 2011, Robbins, director of the trust funds’ audit and collections department, responded to a federal criminal investigation into Brain’s activities with contractors. The same year, she and Rice, who worked for a third-party administrator to the trust funds (American Benefit Plan Administrators, now, Zenith American Solutions), participated in an effort to complain about Brain’s interference with efforts to collect delinquent contributions from contractors. Within weeks of this conduct, Robbins was suspended. Less than six months later, both Robbins and Rice were fired.

The court said Brain and Cook “used their positions and influence to cause the other trustees to vote in favor of” suspending Robbins. Months earlier, the court found, Brain and Cook pressured Zenith into firing Rice for his involvement in efforts to make an internal complaint about Brain. 

Dismissing Cook’s argument that she was somehow immunized from her unlawful conduct because she was an attorney to the trust funds, the court noted the “apparent conflict of interest” Cook had in representing the trust funds while being in an undisclosed “romantic relationship” with Brain, which existed as defendants carried out their retaliatory actions. Reminding lawyers of their ethical duties in California, the court cited California Rule of Professional Conduct 3-310(B), which the court explained “requires that an attorney disclose to a client any personal relationship or interest that he or she knows, or with the exercise of reasonable diligence should know, could substantially affect his or her professional judgment in advising the client.”

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