When all was said and done and the books were closed on 2020, the Mid Atlantic Trust Company Composite Benchmark finished in positive territory in three out of four quarters, providing the hypothetical 401(k) investor with a positive return for the year.
While things certainly got off to a shaky start in 2020, 401(k) investors that rode out the storm can take comfort in the fact that for the second year in a row their 401(k) balance ended up in positive territory. Out of the gate in the first quarter of 2020, the Mid Atlantic Trust Company 401(k) Benchmark dug quite a hole for itself with a 16% quarterly dip. It took a roaring 15.5% gain in the second quarter and another 6% gain in the third quarter to bring balances back into positive territory, only to be topped off by another 11.8% return in the fourth quarter to finish up at 14.85% for the year. This year can serve as a true testament as to why experts recommend 401(k) participants “stay the course” even during the most turbulent markets.
In comparison to the major market indices, the Mid Atlantic Trust Company 401(k) Benchmark was outpaced in the fourth quarter only by the Nasdaq composite, which continued its impressive run to finish up the year at a remarkable 43.6% return for the year.
ABOUT THE MID ATLANTIC 401(k) BENCHMARK
Mid Atlantic Trust Company is a leading financial services organization that provides a wide array of brokerage, advisory, and trust services to a diverse national client base of financial advisors and institutions, asset managers, and benefits administrators through its various subsidiary companies. Because we provide these services, Mid Atlantic Trust Company has plan investment data on over 100,000 401(k) plans representing approximately $120 billion in assets. In response to requests from our institutional clients, we have created the Mid Atlantic Trust Company 401(k) Composite Benchmark. Using data from plans serviced by Mid Atlantic Trust Company with assets of at least $100,000 at the beginning and ending of the month, the Mid Atlantic Trust Company 401(k) Composite Benchmark is designed to reflect the portfolio performance across 401(k) plans serviced, in any capacity, by Mid Atlantic. See the “Methodology” section of this report for details on how the composite benchmark is calculated.
* For the hypothetical participant balances, we used a starting balance based on the average 401(k) participant balance provided by the Investment Company Institute for the Year of the starting balance. In our calculation, we assumed a starting annual salary of $50,000, a combined employee/employer 9% annual contribution rate, and a 3% annual salary increase and applied the monthly rate of return of the Benchmark.