401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2011

December 2012
EBRI Issue Brief #380
Paperback, 56 pp.
PDF, 2,501 kb
Employee Benefit Research Institute, 2012

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Executive Summary

  • The bulk of 401(k) assets continued to be invested in stocks. On average, at year-end 2011, 61 percent of 401(k) participants’ assets was invested in equity securities through equity funds, the equity portion of balanced funds, and company stock. Thirty-four percent was in fixed-income securities such as stable-value investments and bond and money funds.
  • Seventy-two percent of 401(k) plans included target-date funds in their investment lineup at year-end 2011. At year-end 2011, 13 percent of the assets in the EBRI/ICI 401(k) database was invested in target-date funds and 39 percent of 401(k) participants held target-date funds. Also known as lifecycle funds, these funds are designed to offer a diversified portfolio that automatically rebalances to be more focused on income over time.
  • More new or recent hires invested their 401(k) assets in balanced funds, including target-date funds. For example, at year-end 2011, 51 percent of the account balances of recently hired participants in their 20s was invested in balanced funds, compared with 44 percent in 2010, and about 7 percent in 1998. A significant subset of that balanced fund category is target-date funds. At year-end 2011, 40 percent of the account balances of recently hired participants in their 20s was invested in target-date funds, compared with 35 percent at year-end 2010.
  • 401(k) participants continued to seek diversification of their investments. The share of 401(k) accounts invested in company stock remained at 8 percent in 2011. This share has fallen by more than half since 1999. Recently hired 401(k) participants contributed to this trend: They tended to be less likely to hold employer stock.
  • Participants’ 401(k) loan activity remained steady, although loan balances increased slightly in 2011. At year-end 2011, 21 percent of all 401(k) participants who were eligible for loans had loans outstanding against their 401(k) accounts, unchanged from year-end 2009 and year-end 2010, and up from 18 percent at year-end 2008. Loans outstanding amounted to 14 percent of the remaining account balance, on average, at year-end 2011, unchanged from year-end 2010. Loan amounts outstanding increased slightly from those at year-end 2010.
  • The year-end 2011 average account balance in the database was 2.2 percent lower than the year before, but may not accurately reflect the experience of typical 401(k) participants in 2011. To understand changes in 401(k) participants’ average account balances, it is important to analyze a sample of consistent participants. As with previous EBRI/ICI updates, analysis of a sample of consistent 401(k) participants (those that have been in the same plan since 2003) is expected to be published in 2013.