Capitalize, the 401(k) “locator” and rollover technology firm, is in good company.
The firm collaborated with the Center for Retirement Research (CRR) at Boston College on its401(k) Statistics Tracker, which was released on Wednesday.
The Tracker found that nearly 6in 10 U.S. workers now have access to 401(k) plans, the equivalent of 70 million employees. It also found thatan additonal4.3 million employees gained access to 401(k) accounts in 2023.
“The momentum observed in 2022 and 2023 can partly be traced back to recent U.S. legislation, specifically the 2019 SECURE Act and its 2022 successor, the SECURE Act 2.0, which introduced incentives and measures encouraging employers to broaden retirement plan offerings," the company said. "More broadly, these numbers are an outgrowth of the increasingly large proportion of employers that offer employees access to 401(k) plans.”
Capitalize CEO and Co-Founder Gaurav Sharma was altruistic when asked about the Tracker’s genesis.
“Our mission overall is to help people save for retirement,” he said. “We advance that mission in several different ways. One is through the product and technology that we build. Another is by spotlighting issues in the system as a whole so that we can identify areas of the defined contribution market that we think can benefit from policymakers’ and private sector’s focus. This is an idea that we’ve had for some time, which is how can we compile all of the key stats in one place where people can use them to make good decisions.”
Sharma claimed that much of the industry research about participants, balances, trends, etc., is institution-specific. It means, for instance, that it comes from a 401(k) recordkeeper that publishes a piece about the behavior of its participant base.
“What we thought would be really interesting is to aggregate and compile data that is much more cross-institutional and looks at the market as a whole,” he said.
The partnership with CRR lends academic heft to the research that’s reported. Sharma noted a collaborative piece released in 2021 (and updated in 2023),The True Cost of Forgotten 401(k) Accounts, which first found $1.35 trillion in “forgotten” 401(k) accounts, a numberthat then increasedto $1.65 trillion.
The eye-popping amount drewscrutiny and skepticism, yet Sharma stood by the findings.
“We’re very confident in the work that we’ve done with the CRR to quantify the number of forgotten and left behind 401ks,” he said. “When we started the company, we knew there was this phenomenon of forgotten 401(k)s, but nobody had done the work to quantify it. We actually did the work and collaborated with the CRR, and it was a really wonderful experience.”
