Fidelity Counts a Record 595,000 401(k) Millionaires as Savings Rate Hits 14.2%

The number of Fidelity 401(k) accounts holding at least $1 million reached a record 595,000 in the second quarter of 2025, the company said in its quarterly retirement analysis released September 4, 2025. Balances rebounded from early-quarter market turbulence, and the combined employee and employer savings rate held at a record 14.2%. For high savers, the growth sharpens a question that often gets less attention than accumulation: how much of those balances will eventually go to taxes.

What the data show

Fidelity's analysis covers more than 51 million retirement accounts, including 24.6 million 401(k) participants, 17.8 million IRAs and 9.01 million 403(b) participants. According to PLANADVISER:

The prior peak for 401(k) millionaires was 537,000 at the end of 2024. Only 5.5% of savers changed their 401(k) asset allocation during the quarter, and InvestmentNews reported that 82.5% of those who did made a single change. The same report said IRA contributions among Gen X and baby boomer savers rose 25% and 37%, respectively, from a year earlier, and that average 401(k) balances are up 32% from the second quarter of 2020.

Who is affected

Seven-figure 401(k) balances are typically built by long-tenured, higher-income workers who max out contributions for decades. The IRS set the 2025 employee deferral limit at $23,500, with an additional $7,500 catch-up for those 50 and older and a higher $11,250 catch-up for ages 60 through 63, according to the IRS. For many of these savers, most of the balance sits in pre-tax money that has never been taxed.

The after-tax math

A $1 million pre-tax 401(k) is not $1 million of spending power. Every dollar withdrawn from a traditional account is taxed as ordinary income, and required minimum distributions generally begin at age 73, per the IRS. Designated Roth accounts in 401(k) plans and Roth IRAs are not subject to required distributions during the owner's lifetime, and qualified Roth withdrawals are tax-free.

Example: a couple retires with $2 million in pre-tax 401(k) accounts. Assume, for illustration, that withdrawals are taxed at an average 25% combined rate. The after-tax value is roughly $1.5 million. If $500,000 of that total had instead accumulated in Roth accounts, that portion would be available without further federal income tax, and the required distributions that can push retirees into higher brackets would be smaller.

The trade-off runs the other way during working years. A high earner contributing $23,500 pre-tax at an assumed 35% marginal rate saves about $8,225 of current federal tax; the same Roth contribution saves nothing today. Which choice leaves more after tax depends largely on whether the saver's rate in retirement is higher or lower than it is now.

Moves to discuss with your advisor

• Tax diversification. Households with large pre-tax balances often weigh directing some new contributions to Roth accounts.
• RMD projections. Modeling required distributions at 73 and beyond can show whether future income will land in higher brackets.
• Conversion windows. The years between retirement and RMDs are a common period to consider partial Roth conversions.
• Heirs. Most non-spouse beneficiaries must empty inherited accounts within 10 years, which can concentrate taxable income in their peak earning years.

What to watch

Fidelity's third-quarter data will show whether the rebound held. For high savers, the more consequential developments are policy changes to contribution rules, including new requirements for how catch-up contributions are treated, and any future shifts in ordinary income tax rates.

After TAX is an independent publication. Articles are general information, not tax, legal or investment advice. Consult a licensed professional about your situation.