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401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2000
EBRI Issue Brief #239
Paperback, 28 pp.
PDF, 142 kb
Employee Benefit Research Institute, 2001
- This Issue Brief examines asset allocation, account balance, and loan activity of a large and representative group of 401(k) plan participants as of year-end 2000, using data gathered by the Employee Benefit Research Institute (EBRI) and the Investment Company Institute (ICI) in their collaborative effort known as the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. The EBRI/ICI data collection project is the most comprehensive source of 401(k) plan participant-level data available to date, and contains 11.8 million active 401(k) plan participants in 35,367 plans with $579.8 billion in assets. The 2000 database accounts for 11 percent of all 401(k) plans, 28 percent of all 401(k) participants, and about 33 percent of the assets held in 401(k) plans.
- In 2000, equity markets experienced substantial volatility, and broad market indexes witnessed their largest annual declines in nearly 20 years. In this market environment, many equity owners earned negative investment returns. Nevertheless, statistics from the EBRI/ICI database indicate that 401(k) plan participants in aggregate did not experience or make significant changes to their 401(k) accounts during 2000.
- The average asset allocation of 401(k) participants in the 2000 EBRI/ICI database was essentially unchanged from year-end 1999, despite the volatility in equity markets in 2000. Among 401(k) participants in the 2000 EBRI/ICI database, three-quarters of plan balances are invested directly or indirectly in equity securities. Fifty-one percent of plan balances are invested in equity funds, 19 percent in company stock, and 8 percent in balanced funds.
- The average account balance of participants who held accounts in both 1999 and 2000 declined only 0.1 percent in 2000. The change in a participant's account balance is comprised of contributions, investment returns, withdrawals, borrowing, and loan repayments.
- The change in account balance in 2000 varies with participant age. For example, the average account balance of participants in their 20s holding accounts in both 1999 and 2000 increased about 27 percent over 2000 because contributions typically are large relative to existing account balances and more than offset investment returns. Relative to contributions, investment returns are more significant for older participants, and the average account balance among participants in their 60s fell almost 6 percent in 2000.
EBRI Research and Education Centers
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