Data & Research March 24, 2016

No Change in Retirement Assets from 2014 to 2015

Although retirement assets were $24 trillion at the end of both years, the makeup of the market changed.
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Total U.S. retirement assets were $24 trillion as of December 31, 2015, up 3% from the end of September and unchanged for the year, according to data from the Investment Company Institute (ICI).

Although retirement assets were also $24 trillion as of December 31, 2014, the makeup of those assets changed: Annuity reserves and individual retirement account (IRA) assets held steady at $1.9 trillion and $7.3 trillion, respectively, but government defined benefit (DB) plan assets fell from $5.2 trillion to $5.1 trillion, private sector DB plan assets fell from $3 trillion to $2.9 trillion, and defined contribution (DC) plan assets increased from $6.6 trillion to $6.7 trillion.

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Retirement assets accounted for 34% of all household financial assets in the United States at the end of the fourth quarter of 2015, ICI notes.

Assets in IRAs totaled $7.3 trillion at the end of the fourth quarter of 2015, an increase of 2.7% from the end of the third quarter. DC plan assets rose 3.4% in the fourth quarter to $6.7 trillion. Government DB plans—including federal, state, and local government plans—held $5.1 trillion in assets as of the end of December, a 3.4% increase from the end of September. Private-sector DB plans held $2.9 trillion in assets at the end of the fourth quarter of 2015, and annuity reserves outside of retirement accounts accounted for another $1.9 trillion.

Americans held $6.7 trillion in all employer-based DC retirement plans on December 31, 2015, of which $4.7 trillion was held in 401(k) plans. In addition to 401(k) plans, at the end of the fourth quarter, $514 billion was held in other private-sector DC plans, $879 billion in 403(b) plans, $263 billion in 457 plans, and $430 billion in the Federal Employees Retirement System’s Thrift Savings Plan (TSP). Mutual funds managed $3.6 trillion, or 54%, of assets held in DC plans at the end of December.

Forty-eight percent of IRA assets, or $3.5 trillion, was invested in mutual funds.

As of December 31, 2015, target-date mutual fund assets totaled $763 billion, an increase of 5.2% in the fourth quarter. Retirement accounts held the bulk of target-date mutual fund assets: 88% of target-date mutual fund assets were held through DC plans (67% of the total) and IRAs (21%).

The quarterly retirement data tables are available at “The U.S. Retirement Market, Fourth Quarter 2015.”
Compliance March 24, 2016

Tell the IRS What to Do Next

The IRS now and again seeks industry input on what tax guidance to issue next, via its Priority Guidance Plan program. 
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The Department of Treasury and Internal Revenue Service (IRS) are inviting public comment for recommendations of items that should be included in the 2016-2017 Priority Guidance Plan.

In Notice 2016-26, the agencies note that the Treasury Department’s Office of Tax Policy and the IRS use the Priority Guidance Plan each year to identify and prioritize the tax issues that should be addressed through regulations, revenue rulings, revenue procedures, notices, and other published administrative guidance.  The 2016-2017 Priority Guidance Plan will identify guidance projects that the Treasury Department and the IRS intend to work on as priorities during the period from July 1, 2016, through June 30, 2017. 

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The Treasury Department and the IRS say they recognize the importance of public input in formulating a Priority Guidance Plan that focuses resources on guidance items that are most important to taxpayers and tax administration. Published guidance plays an important role in increasing voluntary compliance by helping to clarify ambiguous areas of the tax law. The published guidance process is most successful if the Treasury Department and the IRS have the benefit of the experience and knowledge of taxpayers and practitioners who must apply the rules implementing the internal revenue laws.  

What the agencies will consider and how to submit recommendations can be found in the Notice.

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