Jan March 2003 Feb EBRI Issue Brief (ISSN 0887-137X) is published monthly at $300 per year or is included as part of a membership subscription by the Employee Benefit Research Institute, 2121 K Street, NW, Suite 600, Washington, DC 20037-1896. Periodicals postage Figure 7 F Figure 11 igure A18 rate paid in Washington, DC. POSTMASTER: Send address changes to: Figure 1 Figure 10 EBRI Issue Brief, 2121 K Street, NW, Suite 600, Mar Figure 2 Figure 6 Figure 4 Washington, DC 20037-1896. Copyright 2003 by Employee Benefit Research Institute. All rights reserved, No. 255. Asset Allocation Distribution of Participant Account Balance to Distribution of 401(k) Account Balances, by Size of Account Balance, 2001 Average 401(k) Account Balances, by Age and Tenure, 2001 5 EBRI/ICI Database: 401(k) Plan Characteristics, Figure A11 Ratio of 401(k) A401(k) Plan Average Asset Allocation, 1996-2001 ccount Balance to Salary for Participants in Their 60s by Tenure, 2001 Average Asset Allocation of 401(k) Accounts, by Participant Age, 2001 Asset Allocation Distribution of Participant Account Balance to six years, th percen options available to participants, Figure A6 of the accou t of those in th e sam nt balan e as the m ces at year-end and thus eir 60s with m edian tenure in the 2000 EBRI/ICI database. ore than 20 y prese reflects the entrance of new plans and new ears of tenu nts asset allo re have acco cation by salary range and by unt balan Salary inf ces o of less than rmation a 401(k) Plan Asset Allocation, Account Figure A19 a b Table of Figure A Figure A17 20 Company Stock in 401(k) Plans With Company Stock, F FF F iigure A22 gur F iigur gur igur e A16 e A21 e A12 e A13 a By Age, 2001 Figures Overview and Summary Plan Loans (percentage of participants with account balances in specified ranges) Figure A23 by Number of Plan Participants, 2001 (percentage of total assets) Apr 14 Company Stock in 401(k) Plans With Company Stock, 2001 401(k) Plan Participant Account Ba (percentage of account balances) (percentage) lances, 1996–2001 Figure A7 Figure A10 Figure A8 Figure A9 Figure A4 Figure A6 Figur Figure A5 e A14 Availability of 401(k) Plan Loans, by Plan Sizeb, 2001 available for a subset of partic investm $10,000. participants and the exit ent option. 18 of participants who retire or cha ipants indicates that the m Figure A2 e nge jobs. At year-end 2001, the average dian annual salary among that group is $200,000 Appendix: Percentage of E Additional Figures for the EBRI/ICI Particip ligible 401(k) P (percentage of participants) lan Participants With Loans, a by Plan Size, 2001 ant- Ratio of 401(k) A TA e Ratio of 401(k) A g nure Composition of S e Composition of S Loan Balances as a P ccount Balan ccount Balance to e ce to S lected 401(k) A elected 401( ercentage alary for P S k) A a of 401(k) A ccount lary account Balance Categories, 2001 rticipants , byBalance Categories, 2001 Ag cc e and T in T ount Balances heir 20s by enure, 2001 Tenure, 2001 Percentage of Eligible 401(k) Plan Participants With Loans, by Salary, 2001 Loan Balances as a P (percentage of participants) ercentage of 401(k) Account References The March 2003 EBRI Issue Brief, covers the year-end 2001 data gathered by the Employee Ave6rage Asset Allocation of 401 (perc (k) ent Ac age of counts, by Plan Size and Investm plans offering loans) ent Options, 2001 401(k) Account Balances Less Than $10,000, by Age and Tenure, 2001 Distribution of 401 AverPercen age (k) Plans, Participa Average Asset Ass tag et Alloca e of 401 tion (k Allocation n ) Plan Participan ts, and Ass for 401 of 401(k) (k) Plan Participa ets, by Inve ts Withou Accounts, stment O n t ts ptions, 2001 Asset Allocation Distribution of 401(k) Plan Participant Account Average Asset Allocation of 401(k) Accounts, by Salary and Inv aa estment Options, 2001 $30,130. account balance was $43,215 and the m 400 edian account balance was $12,810 (Figure A11). Availability and Use of Plan Loans by Plan Size EBRI/ICI Database: 401(k) Plan Characteristics, by Plan Assets, 2001 (percentage) for Particip 1 ants W (per ith c L entage) oans, by Plan Siz ae, 2001 2 May Balances for Participants FigurWith Loans, by e A15 Salary, 2001 Contents (( per per cc entage) entage)a 53% Number Average Tenure (years) Percentage of Account Balance Invested in Company Stock Benef Directed Retirement Plan Dat >$100,000 it Research Institute (EBRI) (pe 11% and the Investm rcentage of account ba Figure A3 a Collection Project for GICs ent Company Institute (ICI) and lances) in theY ir ear- a (percentage of Equity by Participa 20s Fund Balan participants n(pe t Ag ces Who r w centag e and Inves ith ace of total) count balanc Have tmen Equt O ity esp les Exposur tions, 200 s than $10,000) e, 1 Balan Withou ces to Equity Fund t Equity Fund Balance s, by Age, T s, by Age and Tenu enure, and Sa re, 2001 lary, 2001 Balances, and Loan Activity in 2001 60 51% (pe The Employee Benefit Research Institute (EBRI) was founded in 1978. Its mission is rcentage of account balances) Participan In a given age group, longer tenure m Because of the changing com 50% t asset allocation also var position of the unive ieseans a highe with plan size (F r percentage of people rse over tim igure A7, top panel), but m e, it is not c with account balances orrect to con uch of the strue the Fifty-two percent of the plans for which loan da 401(k) Account Balances Over $100,000, by ta are availab Alg e in the 200 e and Tenure, 2001 1 EBRI/ICI database of Plan Tenure (years) Total Total Total Account b Age Equity Balanced Bond Money Other Stable Company 18% Age a 350 401(k) Participants, by Age and Tenure, 2001 1996 1997 1998 1999 2000 2001 collabo Cerulli Associates, Inc. “Re rative effort—the EBRI/ICI Participan tirement Industry Update: T t-Directed Retirem rends in 401(k) and IRA Markets.” ent Plan Data Collection The by Age and Tenure, 2001 GICs an d 48% 48% ho we are 2% 0–2 30s(per(pe centag r >2–5 centag e of ac e of partici Figure A1 count ba pant lances) s) W to contribute to, to encourage, and to enhance the development of sound employee benefit (percentage of account ba 17 lances) 87% 87% End 2001 Jun 35.4% 4% Average Account Balance b Total Participants Plans Participants Assets BalanceAverage greater than $100,000. For exam change in av variation can be explained by diffe >$90,000–$100,000erage o 1%(r per mc eentage of dian accoun ple, about par rences in the investm tic t balance fo ipants 5 percent of participants in 7% with ac r the entire database as the experience of count balanc ent options offered by plan sponsors. For es over $100,000) their 60s with 10 or fewer offer a plan loan provision to Cohort Cohort 15% 3 15% Zero Funds 1–10% Funds >10–20% participants (Figure A19). Funds >20–30% Funds >30–40% Value Funds >40–50% 15% The loan feature is m >50–60% Stock 15% >60–70% Other >70–80% 15% oUnknown re commonly >80–90% >90–100% Total 84% 84% 7% 0–2 (percentage of partici 83% pants) 17% 17% Asset Allocation b 1005% Equity Balan ced Bond Money Other Stable b Company $150,000 Cerulli Rep Project. This Appendix provides supplem programs and sound public policy through objective research and education. EBRI is the only private, nonprofit, nonpartisan, ort. Boston, MA: Cerulli Associates, Inc., 2002. >5–10 Age 24% >10–20 entary tables and charts for that report . Zero 101 -20% >20% –80% 14% >80% Total 44% 401(k) Plan Characteristics by Number 40s of Participants: EBRI/ICI Database vs. GICs and GICs and Plan Total Total Total Account years of tenure have account balances in exam “typical” 401(k) plan participants. ple, the percentage of plan assets invested excess of $100,000 (Figure A15). However, about 34 in equity funds tends to fall as plan size associated with large p22% lans (measured by the number of participants in the plan). Eighty-seven 300 a 20% >2–5 $55,502 16% 16% Washington, DC-based organization committed exclusively to public policy research and education on economic security and 19% Plan Size (number of pa 15rticipants) Cohort Funds Fund Percentag s Fund e With Co s Fund mpa s ny Value Fun ds Stock Inve stment O 20s ptions Offe 41.0% re 6.9% >20 d by Plan 6.9% 7.6%76% 6.2% 5.7% 5.3% Plans 3.3% 2.4% Participants 1.6% 13.2% Assets Jul All >$80,000–$90,000 27.8% 14% 7.5% 14% 36.9% GICsand Age 27.8% 14% 100.0% 2% 20% Overview and Summary Equity 20s ................................................... 58.6% 8.7% Cerulli Estimates for All 401(k) Plans, 2001 50s 6.1% 5.6% 3 Figure 7, Asset Allocation Distribution of Participant 6.1%Balan 13.8%cedBond 0.6%Mone 0.4%y Other 100%StableCompany Equity Balanced Bond Money Other StableCompany by Sarah Holden, ICI, and Jack V As 300sets PlansanDer Participants hei, T emple UniversityAssets Balance 12% percent of participants in thei increases, w hile the share in com r 60s with 21–30 years of tenure w pany stock rises with plan size. A portion ith their current em of this trend occurs ployer have Asset Allocation and Investment Options percent of plans with m employee benefit issues. EBRI’s membership includes a cross-section of pension funds, businesses, trade associations, labor ore than 10,000 participan 15% ts include a loan provision, compared with 38 30s 35.6 9.7 8.5 8.2 6.7 5.8 4.8 3.3 2.6 2.0 12.9 >5–10 Age Cohort All Plans 1–10 7,960 51,388 Stock a nd/or $1,474,356,348 Balanced Fu nds $28,691 Equity, Bond, Money, and/or Balanced Funds 40.8% 27.5% 19.9% Holden, Sarah, and Jack VanDerhei. “401(k) Plan 30s 58.0Balan 8.0cedBond 5.7Money4.2Other Asset Allocation, Account Balances, and Loan Stable 6.5Com 16.5pany 0.8 0.3 100 Investment Options/Age Funds Funds Funds Funds Value Funds Stock Asset Allocation ............................................................ 3 Account Balance to Company Stock in 401(k) Plans 7 60s 20s 68% 16% Salary Funds 26%Funds Funds Funds Value Funds Stock 40s$0–$ 50250,0 33.700 15,356 11.9 8.6 7.8 6.5254,58 5.60 4.5$1,734,9 3.232,1 2.514 2.1$6,815 13.6 The EBRI/ICI Database 40 unions, health care providers and insurers, government organizations, and service firms. $49,024 account balances greater than $100,0 because few small plans offer com 16% 13% pa00. The percentage increases to ny stock as an investment option. F 42 percent for participants or example, less than 1 >$70,000–$80,000 b Relationship of Age and Te The investm percent of plans with 10 or fewe 11–25 ent options 2% that participants are offered by a pl Cohor 12,829 r par nure to Acco t ticipants. Fu 220,658 unt Balances rthermore, p an sponsor significantly affect how 5,123,937,641 articipants in smaller plans tha 23,221 Age t Aug Age Cohort 40s 51.6 Age Co hort 8.1 6.5 4.7 14% 9.8 18.1 0.9 0.3 100 and EBRI Fellow Equity, Bond, Money, and/or Balanced Funds, 1–100 54.7% Funds Fund$47,004 s Funds Value Fun16.2% ds8.8% Stock 7.6% Other Un11.6% known Total 0.1% Activity in 2001.” by Sarah Holden, ICI, and Jack VanDerhei, Temple University and EBRI Fellow 13% 80 ICI Perspective, Vol. 9, no. 2; and EBRI Issue Brief no. 255 (Investment All Ages Co Account Balances 50s mbined ......................................................... 33.2 13.8 8.5 7.2 4 5.9 With Company Stock, by Age, 2001 5.1 4.0 2.9 2.4 2.0 .............................. 15.0 9 Plans Without Company Stock, GICs, 12% 20s 14% 14% Cohort >$250,00 26–500–$625,000 10,066 60% 9,437 340,069324,615 4,119,28 8,213,509,192 3,909 24,152 12,690 $100,000 in their 60s with m percent of participants in sm a ore than 30 years of tenure. all plans are offe 30s red company stock as an investment option, while participants allocate their 401(k) offer loans tend to be less likely to have taken out 50s 45.1 8.0 assets. Figure A4 presents the dist 7.9 5.5 a loan than 14.8 participan 17.3 ribution of plans, participants, ts0.9 in larger p 0.3lans (Figure 100 There is a positive correlation between age and account balance among participants in the 2001 20s 25029.1 20s 5.4 13% 35.6 45.4% 29.9 100 60s 37.6 14.8 7.7 5.9 By 4.6 Age 13% 4.0 3.2 2.4 1.9 1.7 16.1 and GICs and/or Other Stable Value Funds 56.6 27.8 $43,215 20.4 Plan Loans Equity, Bond,101– .................................................................... 200500 57.1 Mone y, and/or Balan ced Fund s 4 12.3 64.8% 9.4 9.5%7.2 14.3% 9.7%11.2 0.7 Company Institu 17% te and Employee Benefit Research Institute, March 2003). or Other Stable Valu Relationship of Dat >$60,000–$70,000 e Funds abase Plans to the Universe of Plans 2% 51–100 11 6,805 484,397 Figure 8, Asset Allocation Distribution of 401(k) Plan 12,426,478,362 12% 25,654 Cerulli EBRI/ICI Sep 60s 36.2 $41,156 7.8 10.7 20s 6.3 24.0 14.0 0.8 0.2 100 All>$625,00 35.4 27%0–$1,250,00 11.40 6,729 8.3 7.5 6.2371, 5.4884 5,961,20 4.4 3.1 9,52 2.41 2.016,030 13.9 73 percent of participants in plans with m 53% ore than 5,000 participants are offered company stock and assets by four com A20). Loan ratios vary only slightly when pa binations of investm30s ent o rticipants are grouped based on the size of their fferings. The first category is the base group that 49.4 40% 530s EBRI/ICI database.23.4 Exam ination of the age com 6.3 25 position 38.0 of account balances finds that 53 32.3 152% 100 12% 12% 30s 60s Working Paper Equity, Bond, . No. 9131. Cambridge, MA: National Mone Agnew, Julie, and y, and/or Balan EBRI’s work advances knowledge and understanding of employee benefits and their ced Funds, EBRI Issue Brief ment of the Treasury, February 28, 2002. no. 251 (Investment Company have five or fewer years of tenure and 23 percent This update extends previous findings from the Age Cohort The economic 40s The percentage of participants holding no equity compared to the universe of 401(k) plans, see the For example, provide benefit payments according to the plan at 501–1,000 55.7 11.5 10.1 6.4 11.7 2.7 Equity, Bond, Money, and/or Balanced Funds, of plan sizes offering a variety of investment alterna- The EBRI/ICI Database Changes in Account Balances balances in company stock, including 35 percent who Average Loan Balances The 2001 EBRI/ICI database appears to be a repres $20,000–$40,000 58.0% ................................................... 411.Plan Loans 0% 18.6% 10.7% Participant Account Balance to Equity Funds, entative sam end 2001 (Figure 14). However, there is variation around ple of the estim Figure 9ated universe of All 40 47.7 8.0 7.6 5.2 13.6 16.8 0.8 0.3 100 31% Tenure $37,323 >$1,250,000–$2,500,000 5,252 472,003 9,326,014,100 19,758 40s as an investme25.8 nt option. Participants in plans 40s 7.8 that do not offer com 38.4 51.5 pany stock tend to invest a 28.0 100 401(k) plans (m consists of plans that do not offer company stoc What we do easured by the num importance to the nation’s economy among policymakers, the news media and the public. It does ber of plan participants; Figure A21). 60sk, guaranteed investm 20s ent contracts (GICs), or Bureau of Economic Research, 2002. percent of participants Relationship Between Accou >$50,000–$60,000 and Com 11% pa 11% •ny Stock 3% This with account balances Pierluigi Balduzzi. Issue Brief 11% nexamines asset allocation, account balance, and loan activity of a large and t Balances and Salary Plan of less than $10,000 are Asset Institute and Employee Benefit Research Institute, s 1.1 in their 20s and 30s 17.6 22.3 45% 9 have more than 20 years of tenure. project for 1996 through 2000. For year-end 2000 20s 101–25016.8% 10.1% 5,67820.6% 895,50419.5% funds also tends to increase with tenure (see the Appendix (Figure A1). The Appendix is available 31.1% Average Account Balances Among 401(k) 24,881,790,6671.1% 27,7850.5% the S&P 500 was 100.0% book value. and financial Oct Source: Tabulations From the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. ________. “Can 401(k) Accum Sarah1,001– Holden is sen5,000 51.6 ior economist, Research u 19% lations Generate Si 30s 19% Dep 19% artm 19% ent, at the gnificant Incom9.7 tives. Investmen8. t Co3 6.6 mpe an for Future Retirees? y Institu te (ICI), and 13.0 Jack ” ICI 8.9 hold none. On the other hand, 16 percent of these Source and Type of Data and GICs a 60 nd/or Oth .............................................. er Stable Value F 35% unds 4 by Age, 2001 this average with age (lower the older the participant), 52.0 12.9 ..................................................................... 5.1 3.4 25.2% 9 401(k) plans. Cerulli Associates (2002) estim 200 ates that there w U.S. General Accounting Office. “Private Pensions: ere 399,944 401(k) plans at year- >$40,000–$60,000 64.8 9.1 17.6 40s7.7 50s this by conducting and publishing policy research, analysis, and special reports on employee benefits issues; holding education 18% al 50s larger portion of their assets in 30.0 50s equity funds. Thus, to analyze the 9.0 36.8 53.0 potential effect of plan size, the >30 y ears24.2 100 20 representative group of 401(k) plan participants as of year-end 2001 using data gathered by the “What do we do with November 2002a). 50s This section examines the change in account balances of Among participants with outstanding loans at the end of a other stable value funds. Al Equity, Bond, 251–500 Money, and/ most 28 percent of pa or Balan 2,536 ced Fund 17% 892,421 s rticipants in the 2001 E • Despite the continuing volatility in financial markets, 26,311,024,797 Participants Present in BRI/ICI database are in 29,483 Appendix This section exam (Figure A12). Simines how the ratio o ilarly, of those with account f 2001 account balances greater than $100,000, m balances to 2001 salary varies with age, ore than half results, see Holden and VanDerhei (2001a). Results Includes the 6.6 million participants in plans with company stock. VanDerhe30s i, Temple Universit13.5 y, is research directo environment 9.9 14.0 r of the Em19.8 40.4 Appendix (Figure A8)). pthrough EBRI’s Web site at www.ebri.org. loyee Ben The 2001 EBRI/ICI database contains 14.6 million efit Research1.6 Institute (EBRI) Fello 0.4 down 11.9 percent 100 ws Bibliography Source: Tabulations from the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. 38% Meulbroek, Lisa. “Company Stock in Pension Plans: participants hold more than 80 percent of their Distribution of Plans, Participants, and Assets Perspective, $50,000 Equity, Bond, Vol. 8, no. 3; and Money, and/or Balan EBRI Issue Brief ced Funds, no. 251 (Investm tenure (lower the higher the tenure of the participant), Participants Need Information on the Risks of Invest- Endnotes ent Company Institute and 16% >5,000 44.0 6.0 6.8 4.3 14.3 23.8 30 Over end 2001 with about 45 m 100 view and illion participants. ICI 6%(June 2002) estimates 401(k) plans held $1,754 16 >$6 >$40,000–$50,000 0,000–$8 briefings for EBRI members, congressional and federal agency staff, and the news media; and sponsoring public opinion surveys 0,000 4% 67.6 8.5 16.3 Figure 9, Average Account Balances Among 401(k) 12% 6.6 a b 15 35 b 14% In previous EBRI/ICI updates, GICs and other For a comparison of the median account balances 60s 501–1,00040.6 our Pension Money?60s 1,47010.1 1,034,736 30.8 34,006,495,414 1999, 2000, and 2001, 48.4 32,86518.6 by Age 100 Row percentages may not add to 100 percent because of rounding. remaining panels of Figure A7 group pl Employee Benefit Research Institute (EBRI) and the Investment Company Institute (ICI) in ans by investment option and plan size. >20–30 13% a group of participants who held accounts at year-end 2001, the average unpaid balance is $6,644. a>$2,5 and Com 10000,000 p–$6,25 any Stock, and0,000 5,060 GICs an 40s Again, d/or 906,16 there was virtually no change in loan behavior of 1 19,963,7 71,825 22,031 Nov Program are in their 50s or 60s. T tenure, and salary. these plans—which generally offer equity fund . Special thanks to Lu The ra his Al e positive correlati tio of onso participant accoun 60s , research ass 38% o on between age and account ciate at EBRI, s, bond funds, balanced funds, and money funds t balance who s to salary is pos managed the datab 50s balance is expected itiv ase. ely co In additio rren lated , thanks for earlier years are available in earlier issues of Guaranteed investment contracts. 40s 11.2 10.1 4 12.4 25.5 38.3 active 401(k) plan participants in 48,786 plans with 1.7 0.4 in 2001, after100 Loan Activity by Salary $40,000 continued to be How Costly Is It?” by Plan Size and Com <$40, ................................................................ 000 paWorking Paper ny Stock >$40,000–$60,. No. 02–058. Bos- 000 >$60,000–$80,000 5 >$80, ________. “Appendix: EBRI/ICI 401(k) Accumulation 000–$100, ing in Employer Securities and the Benefits of 43.1 000 4.8 10.9 >$100,000 7.4 All 11% 33.0% account balances in company stock. 30 and account balance (lower the higher the account EB Employee Benefit Research Institute, Nove RIon employee benefit issues. 50s EBRI’s Education and Research Fund mber 2002). (EBRI-ERF) performs the charitable, educational, and 12% billion in assets at year-end 2001.All 47.7 Relative to these estim 268.0 11 ate7.6 s, the 2001 EBRI/ICI database 5.2 13.6 16.8 Participants Present in 1999, 2000, and 2001, 11% >$80,000–$1 31% 1,001–2,50000,000 1,13367.9 8.4 16.0 1,760,070 63,833,734,7566.8 36,268 b 80 Recent EvidenceAll 49.8 40s stable value funds were reported separately. in the EBRI/ICI databases from 1996 to 2001, see the or less their collaborative effort known as the EBRI/ICI Participant-Directed Retirement Plan Data See the Appendix (Figures A9 and A10). “Funds” include mutual funds, bank collective to Darri Row percentages may not add to 100 percent because of rounding. n Helsel and Stefan Kimball at ICI, who assisted in preparing the graphics. This ap >10–20 pendix is being published 1999, year-end 2000, and year-end 2001. Analyzing a similarly to all other years of analysis, loan balances as a Other Stable Value Fun 150 ds 401(k) plan participants in 2001. Only 16 percent of 1.5 27.1 37.4 13.9% as investm>$6,2 ent options. Another 28 50,000–$12,500,000 2,448 percent of participants are in plans that offer GICs and/or 874,076 21,396,750,941 24,479 EBRI Issue Brief because you with age and50s , which can be obtained on EBRI’s nger workers are likely to have lower incom tenure. Participan 9.6 ts in their 60s, ha 11.2 11.7 ving had m 32.8 32.4 es and to have had less tim ore time to accum1.6 ulate assets, tend to 0.3 e to falling 9.1 percent 100 ton, MA: Harvard Business School, 2002. >$30,000–$40,000 6% challenging in Projection Model.” ICI $632.7 billion in assets. The 2001 database accounts for Diversification.” Letter Report Perspective . GAO-02-943. Washing- . Vol. 8, no. 3A Equity, Bond, scientific functions of the Institute. EBRI-ERF is a tax-exempt organization supported by contributions and grants. Mone 8% 8% y, and/ 8% or Balan 8% 8% ced Funds, 8% 22% balance). Asset Allocation Plans Without Compa ................................................................ ny Stock, 5 by Age.............................................................................10 accounts for 12 percent of all 401(k) 4060 7% plans, 33 percent of all 401(k) 7% plan participants, and about 60s Tenure (years) from 401(k) Plans.” 50s Summar si>$1 multan00,00 eou0 sly and in conj y unctio n with the March66.6 8.3 15.3 2003 ICI Perspective and EBRI Issu Average Account Balance (dollars) e Brief, 7.5 “401(k) Plan Asset Dec Appendix (Figure A11). Collection Project. The EBRI/ICI 401(k) database is the most comprehensive source of 401(k) 6% trusts, life insurance separate accounts, and any 6% Loan activity varies with salary. Partic 32% ipants earning between $40,001 and $100,000 are m ore consistent group of participants removes the effect of percentage of account balances (net of the unpaid loan eligible participants had outstanding loans at the end >5–10 EMPLOYEE 5% 5% 5% 5% 5% 5% Web site at www.ebri.org. other stable value funds as an investm >$160s 2,500,0 11.4%00–$27.9 5,000,00014.4 2001, as the bear 1,505 e10.5 nt option, in addition to the “base” options. Alternatively, 44.3 21.6 (Investment Company Institute, November 2002b). 944,45 12 percent of the number of all 401(k) plans, 33 percent ton, DC: U.S. General Accounting Office, September 2 26,419,41.1 88,196 0.2 27,973 in 2000 (see100 have higher ratios, while those in their 20s Distribution of Equity Fund Allocatio accumulate a balance with their current em have the lowest ra ploye ns and Participant Exposure to Equities r. In additio 27 n, they are less lik tios (Figure A16). ely to have 17 and Company Stock, and GICs and/or Salary Range Account Balances GICs, or Other Stable Va 40 2,501–5,000 lue Funds 459 1,613,037 62,570,598,210 4% 4% 38,791 Using administrative For statistics indicating the higher propensity of Some administrators supplying data were unable Distribution of Par Asset Allocation, by Age .............................................. ticipants’ Equity 7 b Working Paper Mitchell, Olivia S., and Stephen P. Utkus. “The Role ________. “401(k) Plan Asset Allocation, Account , Williamsburg, VA: The College of Balances, and Loan Activity in 2000.” ICI 0–2 Allo 36 percent of 401(k) plan assets cation, Acco26.7 unt Balances, and Loan . The distribution of Act5.3 ivity in 2001.” Any assets, participants views36.6 expressed in th , and plans in the is re port are t31.4 hose of30s the 100 Tenure (years) Age Cohort 1999 2000 2001 >$20,000–$30,000 plan participant-level data available to date, containing 14.6 million active 401(k) plan 9% Figure 10, Distribution of 401(k) Account Balances, pooled investment product primarily invested in the Further information is available in an online likely to have a loan outsta All 0 nding than those earning m 64.8 9.5 14.3 ore or less (Figure A22). Am 9.7 ong participants entering and leaving plans on the overall balance) for participants with loans is 14 percent at year- Source: Tabulations from the EBRI/ICI Participant-Directed Retirement of 2001. In addition, for those with outstanding loans Plan Data Collection Proj >2–5 ect. $0 2002a. All 10.0 11.7 11.9 32.9 31.5 Ibbotson (2002)). The Russell 3000 fell about 1.5 0.3 100 31 almost 18 percent of participants are in plan >$25,000,0 20 5,001–10,000 000–$62,500,000 market dragged 1,117 248 s th 1,733,318 at offer com1,of all 401(k) participants, and about 36 percent of the 454,843 44,238,0 78,068,793,503 pany stock, but no stable value 29,579 45,040 30,407 44 percent of total balances in 1996. Much of the move- On average, 48 percent of partic rollovers from a previous job’s plan Other Stable Value Funds ipant account balances ar in their current plan accounts. 60s. Participants in their 20s invest only about 39.0 6.4 e allocated to equity 3.4 funds in the year- records, the EBRI/ICI 2.5 22.6 25.3 BENEFIT20 60s See discussion of these observed correlations in withdrawals among participants in their 60s, see to provide complete asset allocation detail on certain William and Mary, and Chestnut Hill, MA: Boston 6 of Company Stock in Defined Contribution Plans.” Asset Allocation, by Investment Options1–10 <$40,0 67.1 100 000 >$40,000–$60,000 .................... >$60,000–$80,000 7 >$80, ________. “401(k) Plan Asset Allocation, Account 000–$100,9.9 00011.5 >$100,10.6 000 Al l 2003 Perspective, authors and shoul Vol. 7, no. 5; and d not be a 8.3% scribed toEBRI Issue Brief the officers, trustees, no. 239 (Investm or other spo28% nsors of e EB nt Company Institute and RI, EBRI-ERF, or their staffs. >2– a5 24.1 6.3 38.0 30s 37% 31.5 100 EBRI/ICI database for 2001 is si $40,000 participants in 48,786 plans with $632.7 billion in assets. The 2001 database accounts for 0–2 milar to that reported for th by Size of Account Balance, 2001 20s e universe of plans estim 45.2 $8,842 $11,235 ................................. ated by $12,993 11 appendix at www.ebri.org. Fund Allocations by Age The Employee Benefit Research Institute is a EBRI Issue Briefs security indicated (see page 5 for definitions of the are monthly periodicals providing expert evaluations of 7.5% 25% 10 average. About two-thirds, or 6.9 million, of the partici- • The average account balance of participants who participan Guaranteed i ts with a loan outstand n0 vestment contracts. ing, loan ratios tend to decrease as at the end of 2001, the level of the unpaid balance 38% salary increases, f alling from >10,000 231 5,615,581 315,809,566,386 0–2 y 56,238 ears 11.5 percent in 2001, after falling 7.5 percent in 2000. 0–2 >2–5 on and deepened>5–10 assets held in 401(k) plans. >10–20 >20–30 >30 Plans ment in equity funds likely reflects overall equity market With GICs a products, w nd/o hile the rem r aining 27 percent of participants are offered both com 12 percent of their assets in bond funds and GICs and Account pdatabase reports the ac- any stock and Plans Withou end 2001 EBRI/ICI database (Figure A7, top panel). In addition, for any given age and tenure com t Compa ny Stock, GICs, bination, the ratio of accoun However, individual asset allocations vary t balance to salary College, Dec. 20, 2002. NBER Working Paper the Appendix (Figures A12, A13, A14, and A15). Distribution of Participants’ Company Stock Neith $10,000–$20,000 er EBRI or lessnor EBR . No. 9250. Cambridge, MA: I-ERF lobbies or takes positio 15% ns on sp Holden and VanDerhei (2002a—Appendix). Balances, and Loan Activity in 2000.” ICI ecific ________. “Private Pensions: Key Issues to Consider policy proposals. EBRI invites comment o Perspective n this , pooled asset classes for one or more of their clients. 6.2% 30s 33,055 34,757 20s34,884 101–500 65.1 O 9.9 12.9 9.9 >5– Em10 ployee Benefit Research Institute, Nove 23.3 ur publications >2– 5 8.3 m employee benefit issues and trends, as well as critical analyses of employee benefit ber 2001). 38.3 48.1 30.1 b 100 RESEARCH 12 percent of all 401(k) plans, 33 percent of all 401(k) participants, and about 36 percent of the nonprofit, nonpartisan, public policy research Cerulli Associates (Figu 20 re A1). investment categories used in this paper). At the end Equity Funds Balanced Funds<100 100–500 1Company Stock 5.4%501–1,Bond Funds000 1,001–5,000 Money Funds>5,000 GICs and Other Stable pants with accounts at year-end 1999 had accounts at consistently held accounts at year-end 1999, year-end Figure 11, Average 401(k) Account Balance, by Age represented 14 percent of the account balance, net of 20 percent for participants earning $40,000 or less to 12 percent for participants earning in after the terrorist attacks on September 11. Tenure (years) The end of The principal findings of the year-end 2001 analysis Other Stable Value Funds 40s 64,055 64,849 62,900 or Other Stable Value Funds 4.4% prices, which generally rose from 1996 through 1999 National Bureau of Economic Research, October 2002. widely across participants. For example, m There is a p varies som stable value products, in addi eo what with salary. Fo sitive correlation between account tion to the base options. r example, am Salary ore th ong participants in Range ban one-quarter of participants hold no equity aVol. 7, no. 5; and lance and tenure am other stable value funds combined, while those in their Following the Enron Collapse.” Testimony Before the the EBRI Issue Brief ir 20 ong participan s, the ra count balance held in the tio tends to no. 239 (Invest- ts in the Among individual participants, the allocation of account Allocations by Age research>$6 . 2,500,0 ...................................................... 00–$125,000,000 526 8 1,312,137 46,154,225,482 35,175 Only plans in which at least 90 percent of all plan Source: Tabulati policies and proposals. Each issue, ranging in length from 16–28 pages, thoroughly explores one topic. ons from the EBRI/ICI Participant-Directed Retire Years of Tenure 2 ment Plan Data Collection Project. EBRI Notes is a monthly >10–20 26.8 9.0 37.8 26.4 Value Funds 100 501–1,000 63.8 assets held in 401(k) plans.>5–10 27%10.4 15.4 47.7 8.3 All 48,786 14,641,179 632,720,285,276 43,215 Benartzi, Shlomo. “Excessive Extrapolation and the organization, which does not lobby or take positions For example, the Enron Corporation declared of 2001, approximately 61 percent of balanced mutual 32 28 3.1% year-end 2000 and year-end 2001. The average 401(k) 2000, and year-end 2001 declined about 4 percent in and Tenure, 2001 the unpaid loan balance. 50s 100,410 ........................................................... 98,099 92,468 12 INSTITUTE <$10,000 the year witnessed the beginning revelations of corporate The analysis of “Relationship Between Account excess of $100,000 (Figure A23). 0–2 50® 21.1 13.3 24.7 Investment Category18. A wide range of average account balances is are as follows. 9 20.2 1.1 0.5 100 45% 2.4% before moving down during 2000 and 2001 (Figure 3). $20,0020s 73.8 0–$40,000 50.8 11.5 ment Company Institute and Employee Benefit 60s invest 35 percent of their accounts in these assets. Senate Finance Committee. GAO-02-480T. Washing- 3.3 1.5 8.1 9.9 401(k) plan at the7.6 31.8% Distribution of Participants’ Equity Fund 10 periodical providing current information on a variety of employee benefit topics. EBRI’s Washington Bulletin provides sponsors balances to equity funds varies widely around the funds, while a sim 2001 EBRI/ICI database. The participant’s tenure w increase slightly with salary f ilar number of or low-to-m participants hold m odera 32% te salary groups (Figure A17). However, at high ith the employer serves as a proxy for length ore than 80 percent of their balances in 2.0% assets could be identified were included in the final >$125,000,000–$250,000,000 329 1,364,30 Balances 7 56,243,364,467 41,225 >20–30 32%32.7 9.6 36.2 21.5 100 21%>10–20 51.8 Allocation of 401(k) Accounts to Company Stock.” Munnell, Alicia H., and Annika Sundén. “401(k)s and Source: Tabulations from the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. 1,001–5,000 63.5 The10.4 60s13.7 127,13610.6 119,743 108,958 on legislative proposals. ________. “Contribution Behavior of 401(k) Plan Participants.” bankruptcy on Dec. 2, 2001. fund assets are invested in equities (see Investment ICI Perspective, Vol. 7, no. 4; 2 account balance of this consistent group of participants 2001. The change in a participant’s account balance • On average, asset allocation in 2001 was little changed over previous years. While broad equity Distribution of Plans, Partici12 pants, and Assets by Plan Size Balances and Salary” that typically appears in the >2–5 18.8 12.2 19.6 19.4 27.8 reported for 401(k) type plans. Data for the universe 1.4 0.5 100 fraud and a series of bankruptcies, 30s 75.0 with short, timely updates on major federal developments in employee benefits. leading to concern Figure 12, Percentage of Eligible 401(k) Research Institute, November 2001a). ton, DC: U.S. General Accounting Office, February 27, a8.1 9.6 EBRI’s Fundamentals of Employee Benefit6.4 Source: Tabulations from the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Allocations to company stock show a more mixed pattern participant’s current Allocations by Age>$40,000Source: Tabulations from the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. –$60,000 53.2 ...................................................... 911.6 3.7 1.8 28.5 average of 48 percent for all participants in the 2001 Salary• Range Loan activity varies with age, tenure, salary, and All 61,116 61,125 58,785 EBRI/ICI database. equity funds (Figure A8). Furtherm of participation in salary levels the ratio tends to the 401(k) plan. decline som ore, the per Indeed, 63 percent of thos ewhat. A sim centage of participants holding no equity funds ilar pattern occurs am e participants with accou ong participants in nt >30 Asset Allocation by Investment Options >$250,0043.7 0,000 398 9.4 and Age, Salary, or Plan Size 6,362,1230.6 1 397,163,215, 142 16.3 62,426 100 Journal of Finance Company Stock: How Can We Encourage Diversifica- . Vol. 56, no. 5 (October 2001):>20–30 15% 56.8 05 10 15 Participants 20 25 30 9% 35 40 45 50 Company Institute, Quarterly Supplemental Data 0% ). a and >5,00 EBRI Issue Brief0 65.6 no. 238 (Investm market indexes fell 12 percent in 2001, continuing contributions into 401(k) plans as well as 3,4 ent Company Institu7.3 2% te and Em16.9 ployee Benefit Research 8.9 Figure 14 was essentially unchanged from 1999 to 2000 and then consists of contributions, investment returns, with- Source: Tabulations from the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. 0ProgramsFigure 13 offers a straightforward, basic explanation of employee benefit programs in the private and public sectors. The EBRI EBRI/ICI year-end updates has been included in the about the use of company stock in 401(k) plans. Minor investment options are not shown. The 2001 EBRI/ICI database contains 48,786 401(k) >5–10 14.8 16 11.5 16.8 22.7 31.3 of 401(k)-type plans compiled by the Department of 2002b. plans with $632.7 bill2.0 ion of assets and 0.4 100 740s 69.4 3Participants With Loans, by Age, 20019.2 12.0 8.1 ........................ 12 8% 2% Asset Allocation by Age 1–100 101–250 251–500 501–1,000 1,001–2,500 2,501–5,000 Asset Allocation by age. Participants in their 20s have about 14 percent of 5,001–10,000 >10,000employer. Retirement All Plans EBRI/ICI database. Indeed, about 28 percent of partici- The Investment Company Institute is the national >$60,000–$80,000 56.4 11.3 3.7 As a result, many research papers this past year account balance. 2.0 25.6 40s 1747–1764. Account Balances tion?” balances of less than $10,000 have five or fewe tends to increase with ag their 60s (Figure A18). Issue In Brief .............................................................. . No. 9 (Center for Retirement e and te>30 nure. In contrast, the percenta 9 r years of tenure, while 88 percent of those ________. “Contribution Behavior of 401(k) Plan 58.5 ge of participants holding no b Holden and VanDerhei (March 2003) discuss the im 0 pact of investment options on participants’ All 64.8 Percentage of Participants9.5 Loan Balances as a Percentage of 401(k) Account 14.3 9.7 18 Percentage of Eligible 401(k) Participants Guaranteed investment contracts. Institute, October 2001). Databook on Employee Benefits diversified asset allocation generally muted the impact of the poor market performance on is a statistical reference volume on employee benefit programs and work force related issues. declined 3.8 percent in 2001 from $61,125 at year-end drawals, borrowing, and loan repayments. Table of Contents Zero 1–10% >10–20% >20–30% >30–40% >40–50% >50–60% >60–70% >70–80% >80–90% >90–100% Appendix (Figures A16, A17, and A18). Results for Nevertheless, in aggregate, 401(k) plan participants >10–20 0–2 >2–5 11.1 10.5 13.8 >5–1029.3 32.6 Labor from the Form 5500 for 1998 imply an average >10->10–2 20 2.1 >20–3 >20-300.3 >30100 For the distribution of plans, participants, and 14,641,179 participan50s 61.2 ts (Figure A2). Because m Salar osty of the plans have a sm Range 1210.0 15.6 all num 11.0 ber of plans offering loans, the highest percentages of partici- 0 likely to use the loan provision than other participants their plan balances in company stock, while participants savings held in plans at association of the American investment company pants have more than 80 percent of their account 1996 1997 1998 3% Figure 13, Percentage of Eligible 401(k) Participants explored the effects of company stock in 401(k) plans. 1999 The reported account balance represents 20001% 2001 Salary Research at Boston College, July 2002). Participants.” ICI VanDerhei, Jack L. “Retirement Security and Defined Balances for Participants With Loans, by Age, Perspective , Vol. 7, no. 4; and EBRI Changes in Account Balances >$80,000–$100,000 57.2 ...................................All Number of P 10 articipant11.5 4.0 s in Plan49.8 2.2 24.2 participants with accoun equity funds tends to fa Less Than $10,000 ll as salary increases. t balances greater than $100,000 have m >$40,000–$50,000 Mor ore than 10 years of tenure Change in Average Account Balance (percentage) e Than $100,000 asset allo With Loans From the Plan, by Age, Tenure, cations in agg 0–2 regate. Figu >2–5 Num re A5 presen ber of Par >5–10 ticts an analysis of asse ipants in Plan >10–20 t allocation by investm >20–30 >30 ent Plans With Source: TGICs abulations from the EBRAll 48,786 and/or participants’ account balances. The average account balance fell 4 percent in 2001 among I/ICI Participant-Directed Re14,641,1 tirement Plan D79 ata C632,72 ollection Project.0,285,276 43,215 100 Median Age: 43 Years 2000 to $58,785 at year-end 2001 (Figure 9). The change Bloomberg Data. New York, NY: Bloomberg, L.P. participant is the sum of the participant’s assets in all Participant asset allocation varies considerably with age • The average asset allocation of 401(k) participants in year-end 2001 are essentially similar to the year-end Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. >20–30 8.5 Percentage of Account Balance Invested in Company Stock 9.8 10.7 34.5 34.1 account balance (including loan balances as a part of 1.9 0.2 100 assets by plan assets see the Appendix (Figure A2). continued to display a long-term investment strategy. At 60s 48.8 11.1 22.9 14.5 pants with outstanding loan balances are among participants, the asset size for m 13 any plans is modest (Figure 13). Furthermore, only 9 percent of participants . About 31 percent of the plans have assets of in their 40s have 18 percent, and participants in their previous employers or rolled over into individual retire- Distribution of Plans, Participants, $20,000– Tenure, or Account Size, 1996-2001 • industry. Its membership includes 8,935 open-end balances invested in equity funds, while 28 percent hold The change in account balance in 2001 again varies 0 to 2 >2 to 5 >5 to 10Issue Brief For example, Liang and Weisbenner (2002) analyze With Loans From the Plan, by Age, Tenure, Contribution Pension Plans: The Role of Company retirement assets in the 401(k) plan at the >10 to 20 no. 238 (Investment Company Institute >20 to 30 > 30 Account Balances at Year-End 2001 ......................... 10 or Account Size, 1996-2001 (Figure A13). >$1 1300,00 210 58.1 10.7 3.3 1999–20001.7 2000–2001 25.3 1999–2001 Other Stable Value Fun Less Than $10,000 ds >$40,000–$50,000 Mor e Than $100,000 option and also by age of participant. Salary inform participants with accounts at year-end 1999, year-end 2000, and year-end 2001. In addition, Years ation is availab of Tenure le for a subset of participants Profit Sharing/401(k) Council of America. 80 45th An- in a participant’s account balance is the sum of three funds. (Figure 4). Plan balances are constructed as the sum of all Younger participants tend to favor equity the 2001 EBRI/ICI database was essentially un- ________. “401(k) Plan Asset Allocation, Account YearsBalances, and Loan Activity in 1999.” of Tenure ICI 2000 results. year-end 2001, about 45 million American workers held >30 6.4 11.8 8.0 46.1 26.5 account assets) per active 0.9 participant of $41,520 (U.S. 0.1 100 Overview and Summary ................................................................................................................. 2 Plans With GICs a $40,00 Source: T0 32.2 nd/o abulations from the EBR r I/ICI Participant-D 8.4 irected R etirement Plan D 36.1 ata Collection Project. 23.3 100 participants in their 30s, 40s, or 50s (Figures 12 and 13). Cerulli Associates, Inc. “Retirement Industry Update: $250,000 or less, and another 34 percent have plan assets between $250,001 and $1,250,000. with account balances of less than $10,000 have loans and Employee Benefit Research Institute, October or Account Size, 1996–2001 60s have 14 percent. The tendency of younger partici- ment accounts (IRAs) are not included in this analysis. Stock in 401(k) Plans.” Written Statement for the ..........................................13 investment companies (“mutual funds”), 559 closed- no equity funds at all (Figure 8). The percentage of with participant age. For example, the average Source: Tabulations from the EBRI/ICI Participant-Directed Retirem 8 Contact EBRI Publications, (202) 659-0670; fax publication orders to Securities and Exchange Commission (SEC) Form participant’s current employer. Retirement savings ent Plan Data Collection Project. Relationship of Age and Tenure to Source: Tabulations from the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. 19 Source: Tabulations from Source: Tabulations from t the EBRI/ICI Participant-Dirhe EBRI/ICI Participant- Dir ected Retirement Plan D and Assets by Plan Size ata Co ected llection Project. Years of Tenur 20s e 27.1% 15.6% 47.0% Participants with no equity fund balances may still have exposure to the stock market through At the end of 2001, approximately 61 percent of nual Survey of Profit Sharing and 401(k) Plans: All 1–100 45.5 60 loan activity in 2001 continued as observed since 1996: Many participants are in plans offering 52.0 12.9 21.0 5.1 6.9 5.3 3.4 20.3 25.2 in the 2001 EBRI/ICI database. Because asset allocation is influenced by the investm ent factors: new contributions by the participant and/or the funds, while older participants are more likely to invest participant balances in the plan. Plan size is estimated Source: Tabulations from the EBRI/ICI Participant-Directed Retirement Plan changed from year-end 2000, despite the continued 20 34 Other Stable Value Fun 401(k) plan accounts with a total of $1.75 trillion in Perspective, a All Vol. 7, no. 1; and ds 10.0 EBRI Issue Brief 11.7 11.9 no. 230 (Investm 32.9 31.5 Department of Labor, Winter 2001–2002), a figure ent Company Institute, January 1.5 0.3 100 >$4 aSource: T 0,000– abulations from the EBR S I/ICI Participant-Directed Retirement Plan Data Collection Project. In addition, participants with five or fewer years of and 8 percent in balanced funds (Figure 2). Trends in 401(k) and IRA Markets.” 45 percent of participants have account balances of less The EBRI/ICI Database ubscriptions/orders .......................................................................................................... The Cerulli (202) 775-6312. Subscriptions to outstanding. 2000 and 2001, it has still moved up compared with 1996 2001b). pants to favor equity funds and older participants to with up to two years of tenure is $10,756, compared with Furthermore, account balances are net of unpaid loan Senate Finance Committee, Hearing on Retirement EBRI Issue Briefs are included as part of ........ 2 Includes the 6.6 million participants in plans with company stock. participants holding no equity funds tends to increase end investment companies, and six sponsors of unit account balance of participants in their 20s consis- Percentages may 1996 not add to 100 percent because of rounding. 1997 1998 1999 2000 2001 11-K data filed by 997 different publicly traded firms held in plans at previous employers or rolled over 30s 5.2 1996 1997 0.4 1998 1999 2000 5.5 2001 33Account Balances ..................................................... 11 Retirement Plan Data Collection Project. Figure 14, Loan Balances as a Percentage of 401(k) Reflecting 2001 Plan Year Experience loans, but few participants have a loan outstanding (16 percent among those with a loan option). . Chicago, IL: balanced mutual fund assets are invested in equities See “Availability and Use of Plan Loans, by Plan The distribu com Source: T a pany stock or balanced funds. Indeed, 50 percen abulations from the EBR 40 tion of account balan I/ICI Participant-Directed Retirem ces underscores the effects of age and tenure on account The EBRI/ICI t of participants with no equity funds have ent Plan Data Collection Project. Source: T101– Data Collection Project. 500 48.6 abulations from the EBRI/ICI Participant-Directed Retirem 15.3 ent Plan Data Collection Project.5.4 3.9 24.8 employer; total investment return on account balances, Plans With in fixed-income securities such as bond funds, GICs, or as the sum of active participants in the plan and, as Source: T Compa abulations from the EBR ny Stock I/ICI Participant-Directed Retirement Plan D volatility in equity markets in 2001. Among 401(k) ata Collection Project. $60,000 28.1 8.9 38.0 25.1 100 20s 61.6 25 EBRI membership, or as part of a $199 annual subscription to that is within 12 percent of the $47,004 average The 2001 EBRI/ICI database contains 48,786 401(k) EBRI Notes13.6 and EBRI Issue Briefs.4.7 3.6 Individual copies are available 14.6 Report assets. . Boston, MA: Cerulli Associates, Inc., 2002. 2001, and Employee Benefit Research Source: T Percentages may abulations from the EBR not add to 100 percent because of rounding. I/ICI Participant-D Institute, February 2001). irected Re Security: Picking Up the Enron Pieces. Washington, tirement Plan D 40s ata C 1.2 ollection Project. –3.0 –1.8 tenure or with more than 30 years of tenure are less than $10,000, while 11 percent of participants have Although the percentage of participants’ account (Figure 2). At year-end 2001, equity funds represent favor fixed-income securities holds up even when ac- $82,996 for participants in their 40s with more than 20 balances. In addition, the EBRI/ICI database for any Relationship of Database Plans to the Universe of Plans ........................................................... 2 investment trusts. Its mutual fund members manage with age. tently holding accounts increased about 16 percent in For example, 29 percent of participants in between 1991 and 2000. They find that plan design into individual retirement accounts (IRAs) are not 9 The Typical 401(k) Plan Participant Account Balances for Participants With Loans, Profit Sharing/401(k) Council of America, 2002. ________. “The Impact of Employer-Selected Invest- Plan Loans ...................................................................... Number of11 Participants in Plan (see Investment Company Institute, Size,” in the Appendix for explanation of EBRI/ICI 20 Quarterly Allinvestm balances. In a given age group, fewe ents in either company stoc 18% 18% 16% 18% 18% k or balanced funds (Figure A9). r years of tenure m 16% eans a highe 50s All –2.3 r percentage of participants As a result, m 16% –5.7 15% a 14% ny 14% 14% –7.9 14% which depends on the performance of financial markets other stable value funds. On average, participants in such, does not necessarily represent the total number of >$6 0,000501– –1,000 49.8 with prepayment for $25 each (for printed copies) or for $7.50 (as an e-mailed electronic file) by calling • The average asset allocation of 401(k) participants in the 2001 EBRI/ICI database was 14.0 participants in the 2001 EBRI/ICI database, almost 4.2 3.5 27.3 $20,000–$40,000 35.0 6.4 8.5 9.2 40.8% Source: Tabulations from the EBRI/IC30s 62.0 I Participant-D By irected Retirement Tbalance estimate from the 1998 EBRI/ICI database. enure DC: Employee Benefit Research Institute, February plans with $632.7 billion of assets and 14,641,179 Plan Data Collecti13.2 4.7 on Proj ect. 2.8 15.5 balances invested in equity funds has declined during account balances greater than $100,000 (Figure 10). The This Issue Brief examines asset allocation, account 48 percent of participants’ assets, compared with counting for investment options offered by the 401(k) years of tenure. The increase in account balance as given year captures a snapshot of the account balances assets of approximately $6.4 trillion, accounting for their 20s have no equity fund investments, compared 2001 because contributions typically are large relative 5 Distribution of Plans, Participants, and Assets by Plan Size with respect to investment options offered and included in this analysis. ...................................................... 2 Enron. “Enron Files Voluntary Petitions for Chapter ment Options on 401(k) Plan Participants’ Asset by Age, Tenure, or Account Size, 1996–2001 ...............13 Characteristics of Participants With Participants in 401(k) plans cover wide ranges of age and tenure. Sixty percent of participants are 60s –5.8 –9.0 –14.3 a The median tenure in the 1999 EBRI /ICI database was seven years (see Holden and VanDerhei (January/February Supplemental Data data on plan loans (Figure A19). In addition, for the $80,000 19.8 ). EBRI or from www.ebri.org. 0 Change of Address: 9.1 EBRI, 2121 K Street, NW, Suite 600, Washington, DC 20037, (202) 42.4 28.7 100 and on the allocation of assets in the individual’s ac- their 20s have 59 percent of their account balances employees at the sponsoring firm. participants with no equity f with account balances of less th essentially unchanged from year-end 2000, despite the continued volatility in equity markets unds have exposure to equity-rela an $10,000. For example, 89 percent 70 percent of plan balances are invested directly or ted investm of participants in their 20s ents through company Purcell, Patrick J. “Employer Stock in Retirement40s 56.2 30 Database 27, 2002a.13.3 4.9 3.1 20.6 balance, and loan activity of a large and representative >$4 Guaranteed i1,001–0,000–$65,000 50.5 n0,000 34.7 vestment contracts. (y8. ear Cerulli Associates (2002) estimates an average 1 7.3 11.1 participants (Figure 1). Most of the plans in the database s) 4.6 2.7 10.2 29.0 39.7 Median Account Balanc a e median account balance was $12,810 at year-end 2001. Investm 14 ent Company Institute. “Mutual Funds and the U.S. Retirem investments. These effects tend to occur across all age plan sponsor. tenure increases tends to be largest for participants in at year-end and thus reflects the entrance of new plans ent Market in 2001,” ICI Age Cohort AllAge Cohort 0.01 –3.8 –3.8 Asset Allocation by Investment Options approximately 95 percent of total industry assets, with 41 percent of participants in their 60s. However, in to existing account balances and more than offset direction of the employer contribution are important 11 Reorganization; Sues Dynegy for Breach of Con- The Typical 401(k) Plan Participant........................................................................................... Allocations: Preliminary Findings.” Working Paper 2 . Outstanding Loans 2001 Tw)) o . possibl 775-9132; fax number, (202) 775-6312; e-mail: Publications Subscriptions@ebri.org. e expl .................................................. anat<100 100–500 ions for the low account bal 11 ances am501–1, ong t000 his group 1,are:001–5, (1000 ) that their em Membership Information: >5, pl000 oyer’s 401(k) Inquiries >$8 bin their 30s or 40s, while 12 percent of participants 0,000– Figure 12 are in their 20s and 6 percent are in their 60s analysis of loan activity by plan size, see the 5 13 count; and withdrawals, borrowing, and loan invested in equity funds, compared with about Plans: Investment Risk and Retirement Security.” Investment options are grouped into eight catego- with two or fewer years of te stock and/or balanced funds (Figure A10). in 2001. Among 401(k) participants in the 2001 EBRI/ICI database, almost 70 percent of plan nure have account balances of less than $10,000, com indirectly in equity securities. Forty-eight percent of pared with 62 50s 49.4 12.7 32245.2 3.5 27.3 20s Row percentages may not a 12 11 dd to 100 9 11 perc 11 ent beca 9 use of round account balance (including loan balances as part of are small, whether measured by the number of plan Account balances are net of unpaid loan balances. ing. 20s 30 29 28 25 30 27 group of 401(k) plan participants as of year-end 2001. >5,000 57.5 9.7 5.0 2.9 23.1 20 The variation in account balances partly reflects the >$60,000–$80,000 36.8 Figure 310.1 7.3 their 50s and 60s. and new participants and the exit of participants who 9.0 36.6 ©2003 Fundamentals. Vol. 11, no. 2 (June 2002). groups of participants. tract, Seeking Damages of at Least $10 Billion.” and represent more than 90 million individual aggregate, about 50 percent of participants with no investment returns. Relative to contributions, invest- News Prepared for The Center for Pension and Retirement indicators of how employees direct their own ________. “The Role of Company Stock in 401(k) Unless otherwise indicated, all asset allocation Asset Allocation plan has only recently bee regarding EBRI membership, and/or contributions to EBRI-ERF should be directed to EBRI President Dallas Salisbury at Percentage of Eligible 401(k) Participants With Loans, by Age, 2001 ............................................................................................................... n established (indeed, 49 percent of all 401(k)-type plans in existence in 1995 ............... were 3 $100,0 Sourc0 e: T0 16.9 abulations from the EBR I/ICI Participant-D8.2 irected Retirement Plan D 43.2 ata Collection Projec t. 31.7 100 14 >30 Years Appendix (Figures A20 and A21). Average Loan Balances 30s (Figure A3). The m 20 .............................................. edian age of 20 18 20 the participants in the 2001 E 19 17 13 BRI/ICI database is 43 years old, CRS Report for Congress (Congressional Research balances are invested directly or indirectly in equity securities. Forty-eight percent of plan $15,246 30s 22 a 20 20 18 18 20 20 repayments. 36 percent of account balances for participants in their ries. Equity funds consist of pooled investments plan balances are invested in equity funds, 17 percent The mix of investment options offered by a plan sponsor percen 6 60s 37.5 t of participants in their 20s with five to 10 years of Source: Tabulations from the EBRI/ICI Participant-Directed Retirement Plan tenure (Figure A14). Older workers 12.0 5.5 4.1 39.8 On average, asset allocation was little changed over All 52.0 Domestic Stock Market Indexes, December 1996–December 2001 account assets) of $36,390 for 2001. Profit Sharing/ 12.9 participants or by total plan assets. Thus, unpaid loan balances are not included in any of 5.1 3.4 25.2 Indeed, 43 percent Employee Release effects of participant age, tenure, contribution behavior, . Houston, TX: Enron Corporation, December >$80,000–$1 the above address, (202) 659-0670; e-mail: salisbury@ebri.org 00,000 38.9 11. Research (CPRR) Current Pension Policy Issues 2 8.0 retire or change jobs. When analyzing account balances, Plans.” Written Statement for the House Ways and 8.8 33.1 shareholders. equity fund balances have exposure to the stock market ment returns are more significant for older established aft In some analyses, the er 1989 (U.S. subset Depa is restricted t rtment of Labor (Spri o participant nsg 1999), earcontributions. Sengmüller (2002), also using ning table $20,0B.10)) 00 or m , or (2) tha ore. The m t the em edian sal ployee only ary in thatrecently sub- averages are expressed as a dollar-weighted average. >$1 40s00,00 Asset Allocation and Investm 0 16.5 22 22 20 22 ent Options................................................................................... 217.3 19 40s41.9 0–2 Years 16 1534.3 14 14 15 3 15100 11 Data Collection Project. Service, July 12, 2002a). b one year older than in 2000. Forty balances are invested in equity funds, 17 percent in company stock, and 8 percent in balanced percent of the particip 6% ants have five or fewer years of tenure, primarily investing in stocks. These funds include equity A sense of the relation of the three components is in company stock, and 8 percent in balanced funds. significantly affects the asset allocation of the partici- Bibliography Plans With Compa .................................................................... ny Stock (month-end level) 14 previous years. While broad equity market indexes fell display a similar pattern. For exam 26ple, 72 percent of all participan 401(k) Council of America (2002) suggests that the the eight asset categories described. of the plans in the database have 25 or fewer partici- ts in their 60s with two or Benefit 34 Plans With Company Stock Sour ce and T $13,493 ype of Data 2, 2001. rollovers from other plans, asset allocation, withdrawals, 50s sam joined th ple ise abou plan. In t $4 eith 7, 17 50er ev 0.18 ent, jo 16 b tenu 18 re wo 17 u15 ld not accurately reflect actual 40 Conference, at Miami University, Oxford, OH, June it is important to recognize the combined effects of Means Committee, Hearing on Retirement Security 1(k) plan participation. Distribution of Par 50s ticipants’ Company 12 11 11 11 11 11 through company stock or balanced funds. participants and the average account balance among See the Appendix (Figures A22 and A23) for loan >$100,000 43.1 10.7 11-K filings, finds that past performance predicts a11.1 8.1 26.9 U.S. Departm ent of Labor. Pension a nd Welfare Benefits Adm inistration. Private Pension Plan Account Balances $13,038 Plans Sample of 6.9 million participants with account balances at year-end Asset Allocation by Investm >20–30 Y ent Options ears and Age, Salary, or Plan Size .................................... 3 19% $12,810 funds. 21 8 evident in the change in average account balances by age mutual funds, bank collective trusts, life insurance while 6 percent have m20s 48.8 ore than 30 years of tenure. The median tenure at the current employer is 4.8 6.2 7.4 32.2 pants in a plan. Figure 5 presents four combinations of 60s 999998 60s 10 99999 Research In this effort, EBRI and ICI have collected data average account balance (also including loans) for pants, and 33 percent have 26–100 participants. In Participants in their 20s hold approximately ________. “The Enron Bankruptcy and Employer 12 percent in 2001, continuing contributions into 401(k) fewer years of tenure have account balances of less than $10,000. In c 8–9, 2001. Draft, May 2001c. and Defined Contribution Pension Plans. Washington, ontrast, only about 20 Appendix loan activity, and employer contribution rates. Informa- ......................................................................... 2201–100 52.7 166.8 actions of participants present in consecutive years in 18% 1999, year-end 2000, and year-end 2001.10.4 16.3 12.4 Sarah Holden is senior economist, Research Depart- activity by salary. participants in their 60s fell about 9 percent in 2001. Figure 5 allocations to company stock (and volatility and • Participants’ asset allocations vary with age. As also Source: Tabulations from the EBRI/IC Bulletin, Abstract of 1998, Form 5500 Annual Reports All Editorial Board:$11,873 I Participant-D Dallas L. Salisbury, publisher; Steve Blakely, managing editor; Alicia Willis, distribution. Any views expressed in this publ irected Retirement 43.1 4.8 10.9 Plan Data Collecti 14 . Washington, DC: U.S. Governm on Project. 7.4 ent 33.0 ication Stock Allocations by Age Eschtruth, Andrew D., and Jonathan Gemus. “Are $11,600 12% 7 15 Distribution of Equity Fund 22 Allocations and Participant Exposure to Equities Several EBRI and ICI members provided records on ......................... 4 b This system of classification does not consider the group. In the consistent group of 6.9 million participants, separate accounts, and other pooled investments.30s 49.0 4.7 6.2 5.8 33.5 investment offerings, Institute — I The nvest rat mieo nt o op f 4t0 i starting with a base group ons a 1(k) acc re gr ount oup bal ed i an nce to ei (at gh tth ca e cur tego rent ries. em (Acc ploy oer) t unt o bal Age cohort based on participant’s age at year-end 1999. sal anc ary es a alone re net is not of l a oa nn i n bdi alcat ances a or ofn pre d th pus ared un ness paid from some of their members that serve as plan record Stock in Retirement Plans.” plans as well as diversified asset allocation generally 100 • About 45 percent of the participants in the EBRI/ICI year-end 2001 database are in plans CRS Report for Congress plan sponsors participating in their 2001 survey, DC: Employee Benefit Research Institute, February contrast, only 4 percent of the plans have more than 2 percent of the total assets in the 2001 EBRI/ICI and those of the authors should not be ascribed to the officers, trustees, members, or other sponsors of the Employee Benefit Research Institute, Average Asset Allocation of 401(k) Accounts, by Investment Options, 2001 ment, at the Investment Company Institute (ICI), tion in the EBRI/ICI database can be used to examine Average and Median Account Balances 101–500 50.9 17% 9.3 the database as compared with the effects of entry and 11.4 9.7 17.1 However, some participants in their 60s may be business performance have a weak effect). (For shown in previous years, younger participants tend to Note: Row p Endnotes Tenure (years) e......................................................................... rcentages may not add to 100 percent because of round 16 ing. Older Workers Responding to the Bear Market?” Printing Office, Winter 2001–2002. Just ________. “401(k) Plan Asset Allocation, Account Tenure (years) active participants in 401(k) plans they administered for Plans With Compa Account Balances............................................................................................................... ny Stock and GICs and/or number of distinct investment options presented to a Plan Loans ............. 4 35 a the average account balance of participants in their 20s Education and Similarly, bond funds are any pooled account primarily loan for 40s 44.8 retirem balances a ent. A co the EBRI Education and Research Fund, or their staffs. Nothing herein is to be construed as an attempt to aid or hinder the ado re not i mp nlete an cluded in a alysis o ny of t f prep he e aredn ight asse ess fotr cat retirem egorient would es describe requi d.4.9 ) Ere estim quity fu8.0 ating projecte nds co nsi7.0 st ofd p balances at ool ed ption of any34.4 consisting of plans that do not offer company stock, (Congressional Research Service, March 11, 2002b). 200 offering company stock as an investment option. More than half of these participants hold 26, 2002b. keepers and administrators. The data include muted the impact of the poor market performance on The median loan balance outstanding is $3,659 at 80 (percentage of account balances) which includes profit-sharing and combination plans 1,000 participants. However, participants and assets are 16% database; participants in their 30s hold 14 percent; Among the 6.6 million participants in plans with com- and Jack VanDerhei, Temple University, is research the relationship between account balances and age, 0–2 643553 exit of plans and participants from the database. 0–2 27 27 24 24 24 22 making withdrawals as well. The EBRI/ICI database is constructed from administrative record earlier work using 11-K data, see Benartzi (2001).) concentrate in equity assets, while older participants s of 401(k) plans. The database the Facts On Retirement Issues 1501–1,000 48.2 . No. 5 (Center for Balances, and Loan Activity in 1999.” ICI 5.9 11.0 11.1 Perspective 22.4 , Other Stable Value Fun pending legislation, regulation, or interpretative rule, or as legal, accounting, actuarial, or other such professional advice. ds 23 year-end 2001. These plan administrators include i retirem nvest Th Average and Median Account Balances e Em m ent by also c ent pls pri oyee Ben marionsi ly e i fit Research In nvest derinig retirem ng in st oc stitu ent ks. te is i T ncom hese f a no e from u nprofit, non ..................................................................................... nds i Soci nclud ale eq Secu pa given participant, but rather the types of options rtisan uity m rity , pub , de utu flic ial fund ned pobe licy s, nefi b research atn pl k ans, collectiv o IR rgA an s e trusts, life i, a zatio nd n ot , wh her ich 4 Research Fund 15% rose about 27 percent in 2000 and another 16 percent in invested in bonds, and balanced funds are pooled ac- >50s 41.2 2–5 15 13 12 13 14 124.9 11.5 8.2 33.5 GICs, or other stable value funds. 20 percent or less of their account balances in company stock, including 35 percent who hold Participants in these >2–5 24 24 22 22 25 22 year-end 2001. demographic information, annual contributions, plan 60 as well as 401(k) plans, is approximately $70,300. concentrated in large plans. For example, 73 percent of director of the Employee Benefit Research Institute participants in their 40s hold 34 percent; participants participants’ account balances. The average account pany stock as an investment option in the year-end 2001 tenure, and salary of participants. account balances at year-end 1999, year-end 2000, and 10 Retirement Research at Boston College, September Russell 3000 Index. Tacoma, WA: Frank Russell Vol. 7, no. 1; and Other recent research discussing company stock in ________. “The Role of Company Stock in 401(k) invest more in fixed-income assets. Plan design also EBRI Issue Brief no. 230 (Invest- contains only the account balances held in the 401(k) plans at participants’ current employers. 1,001–5,000 45.3 7.1 9.5 9.1 27.9 Figures > d i________. defi n o 5–10 Fo su es ned rance r a non co t l a se on nt bb al pa riy Private Pension Plan Bulletin, Abstract of 1995, F y brat su o is trie o tak o acco n f 24 t pl e h e po au cha n24 n s, sition ts p , no and ge ssi 22 s i o bl ot nn acc y leg her 23 frou om p islative propo o nt 23 pre o lbal ed i va i 20 o n nces us em vestof sals. mpl e th nt oy e gro s. Si mmutual fund companies, insurance companies, and ent m up . Fo il of p arlr y > ,refe a bo 5–10 rticipan nd reo nces t f rm 5500 Annual Reports. uts with nds o are su ch an accou ry e po search 23ntol s ed at 21 , see acco year-end H 19uo nltd p 1 18 er n 999 i a mn ari , 21 d ly 20 All rights$20,000–$40,000 35.8 7.2 presented. Preliminary research analyzing 1.4 million 2.9 1.2 22.1 30.2 • At year-end 2001, the average account balance (net of60s 37.5 180 Relationship of Age and Tenure to Account Balances ...............................................................4.9 21.0 8.6 b 5 27.7 2001, while the average account balance of participants counts invested in both stocks and bonds. Company stock none. On the other hand, 16 percent of these participants hold more than 80 percent of their 22% plans—which generally offer equity funds, bond funds, (EBRI) Fellows Program. Special thanks to Luis balances, asset allocation, and loan balances. balance fell 4 percent in 2001 among participants with EBRI Issue Brief 40 is registered in the U.S. Patent and Trademark Office. ISSN: 0887-137X 0887-137X/90 $ .50+.50 For a comparison of the average account balances in participants are in plans with more than 1,000 partici- GICs and in their 50s hold 36 percent; and participants in their 23% EBRI/ICI database, there is a wide range in the propor- 2002). Company. year-end 2001, this section analyzes the account bal- ment Company Institute, January 2001d, and Plans.” Written Statement for the House Education 401(k) plans includes: Gravelle (2002), The Vanguard influences participants’ asset allocations. > Retirem 10–20 ent savings held in plans at previous em 27 29 27 28 26 25 ployers or rolled over into >10–20 individual retirem 15 15 14 13 ent 14 15 in year Van veD - sted ee nd rhei in bond 20 (Ja 00, and nua s, ry and year- /Feb ba rua e lan nd rc y 2 ed 20 001 f0 und , see 1). I s ar nH a e o dl p d d o ien to ion, l an ed accou d V Hola dnD en nt a erh s in nd e v Va i ( ested M nD ar i er ch 200 nhei bo t(N h sto 3) ov . c em ksber 2 and bon 002) d s de . C vel om ops a pany sto model ck is that >5,000 42.4 4.3 11.3 7.0 34.5 reserved >10–20 Years consulting firms. Although the EBRI/ICI project has >2–5 Years Washington, DC: U.S. Government Printing Office, Spring 1999. Figure 8participants drawn from the 2000 EBRI/ICI database plan loans) for all participants was $43,215 and there >$40,000–$60,000 38.5 7.2 2.9 1.7 22.1 27.1 in their 60s fell about 6 percent in 2000 and another Plans is equity in the plan’s sponsor (the employer). Money With Compa Relationship Between Account Balances and Salary ny Stock and GI account balances in company stock. Cs Equity Alonso, research associate at EBRI, who managed Balanced ................................................................. Bond Money Other Stable Company6 balanced funds, and money funds as investment op- accounts at year-end 1999, year-end 2000, and year-end 2 20 the EBRI/ICI databases from 1996 to 2001, see the pants, and these same plans account for 82 percent of all 60s hold the remaining 14 percent of the total assets. >20–30 25 28 25 27 26 25 tion of participant account balances allocated to company ances among all participants with account balances at Employee Benefit Research Institute, February and Workforce Committee, Subcommittee on Em- >20–30 11 11 11 10 10 11 Relationship of Age and T enure to Account Figure 1, EBRI/ICI Database: 401(k) Plan Charac- Group (2002), Purcell (2002a; 2002b), U.S. 9 equi p Th rojects th e In ty in v t eh stm e e pro pl ean’s n por t Co tio sp m n of o pn an s an oy Institu r (t in he em divite is th dual ploy ’s er). e preretirem n a M tio oney nal asso fu ent incom nd ciatio s conn of t s eist that of tho he mig Am s he ter fund be re icans placed by inv design estm ed to e n 401(k) plan t co mm ain pan tain y indu a stab accum stry. le sh ulations Its are accounts (IRAs) are not included in this analysis. Furthermore, account balances are net of 160 Asset Allocation Distribution of 401(k) Plan Participant Account Balance to Equity Funds, Fidelity Investments. Sengmüller, Paul. “Performance Predicts Asset All 43.1 Building Futures, Volume III: collected data from 1996 through 2001, the universe of 4.8 10.9 7.4 33.0 Other recent studies of 401(k) plan participants Investment Options Offered by Plan Funds Characteristics of Par suggests that participants are not influenced by the Funds Funds Funds Value Funds ticipants W Stock ith and/or Othe is a wide distribution of account balances around that r Stable Value Funds • the database. In addition, thanks to Darrin Helsel The portion of a participant’s account allocated to each 9 percent in 2001 (Figure 9). For younger participants, funds consist of those funds designed to maintain a >30 13 1614171615 >30 788989 tions—have the highest allocation to equity funds. 11 Plan Loans>$60,000–$8 ..................................................................................................................... 0,000 42.0 0 7.3 3.0 2.0 22.4 ..................22.7 7 Appendix (Figure A11). plan assets. For the distribution of participants by age or tenure, 2001. In addition, loan activity in 2001 continued as • The average account balance of participants who consistently held accounts at year-end 1999, stock. Among these participants, 55 percent hold 2001d). ployer-Employee Relations, Hearing on Enron and teristics, by Number of Plan Participants, 2001 m price. Stable at retirem A em pb pershi roxent, u im p i at value products s nely cl nde udes 1 r se perce 8 ve ,9ral di 3 n5 t of t ou p ffe ch as en he rent -e part nd guara pr i in c oivest jp ecte n an teed investm m ts .......... d e sce int n t com h ne ari 5 dat p oani s. e ant contracts base es (“m year-end 2001. Whereas the year-end 2001 database had a m utual (GIC i f ssi un ng d s)—ins s”) bi,rt 55 h dat uranc 9 cl eose ; e wer com d-e en y p do any products i un nvest ger t m he ant n 2 that 0 years Department of the Treasury (2002), VanDerhei by Age, 2001 Balances How Workplace Savings Are Shaping the Future of Allocation: Company Stock in 401(k) Plans.” Plans unpaid loan balances. In addition, With Compa 12 ny Stock and GICs the EBRI/ICI database for any Working given year captures a snapshot plan administrators varies from year to year. Thus, 20% have focused on one or a few large plans, the plans of sheer number of investment options presented. On and Stefan Kimball at ICI, who assisted in preparing average. U.S. General Accounting Office. “401(k) Pension 20s 46.8 Plans: Loan Provisions Enhance Participation of the main investment categories analyzed in this7.4 3.2 4.1 8.7 28.5 contributions are of greater importance in percentage stable share price. Stable value products such as guaran- <100 100–500 501–1,000 1,001–5,000 >5,000 Participants in plans that offer GICs and/or other stable Outstanding Loans observed since 1996: many participants are in plans >$8 Availability and Use of Plan Loans by Plan Size 0,000–$100,000 45.7 6.5 3.2 1.8 ....................................................................... Beyond: Enhancing Worker Retirement Security. a 22.3 19.6 7 see the Appendix (Figure A3).year-end 2000, and year-end 2001 declined about 4 percent in 2001. The change in a 20 percent or less of their account balances in company com gua old;ra p or ntee a s ani we es, a re ol p necific rate d si der t x s ha pn o n 69 sof o y rs re ears of turn uol non the i id. t i T nvest heyn w m vested ca e ent re tnot rust ipita s n. cl Itu l ov s dm ed u er th i tu nal te life of t h fun is ad n m aly eh s m ie co sb . ers m ntract anag —a end asset other s of a stabl ppr eoxi val m ua e tely (percentage of participants) includes many participants who are new to their 401(k) Account Size 9% (2002a; 2002b; 2002c; 2002d), Fidelity Investments Account Size and/or Othe 140 r Stable Value Funds 29 Retirement, A Report on Corporate Defined Contribu- Figure 2, 401(k) Plan Average Asset Allocation, Paper Could we send a friend or colleague a complimentary . New York, NY: Columbia University, February Ibbotson Associates. Did you read this as a pass-along? Stay ahead of employee benefit SBBI (Stocks, Bonds, Bills, and aggregate figures in this report generally should not be the graphics. This report is being published simulta- a particular record keeper, or household survey data. 1630s 48.0 The difference in average account balance average, participants face 10.4 distinct options but,6.5 2.9 2.2 10.0 29.2 Equity, Bond, Money, and/or Balanced Funds 64.8% 9.5% study varies across participants. For example, about 14.3% 9.7% terms than other factors because these participants’ teed investment contracts (GICs)—insurance company But May Affect Income Security for Some.” Letter Report, 10/01/97. GAO-HEHS-98-5. value funds as an investment option allocate a smaller Washington, DC: Employee Benefit Research Insti- offering loans, but few participants have a loan outstand- $ fu 6 The n .4 trillio Loan Activity by Salary ds—sy tendency nt n,het acco ic GICs of the unting ratio (a for app participant’s account balance consists of contributions, investment returns, withdrawals, po of rt folio account r........................................................................................................ ox o im f afixe tbalanc ely 9 d-i5 nes to sala p com ercen e secu t o ry to f to ritita es “wrappe peak at hi l industry asset gher d” with a salary levels a s, and rep guara rn esent tee nd the to provide benefit mon re th fall off likely an On average, partici- 90 millio ...... n 7 In the EBRI/ICI database, there is a positive correlation < $10,000>$100,000 12 11 9 11 1145.7 9 5.0 stock, including 35 percent who hold no company stock in < $10,0003.5 1.3 8% 39 38 3622.1 37 3921.8 34 plans and therefore new to the database, the average • Individuals with account balances of less than $10,000 (2002b), and Profit Sharing/401(k) Council of America issues with your own subscription to EBRI Issue Briefs for only $49/ tion Plans. 2002. Boston, MA: Fidelity Investments, 2002a. copy of EBRI Issue Brief? Inflation) 2002 Yearbook: Market Results for 1926– 221996–2001 ....................................................................... 6 9 121–100 46.3 9.5 Most participants in 401(k) plans have borrowing neously by the Investment Company Institute as an 5.3 10.3 15.6 9.4 Percentage of Account Balance Invested in Equity Funds used to estimate time trends, unless this report indicates For convenience, minor investment options are not For a more complete discussion of recent research,40s 43.2 between the consistent subset at year-end 2001 and on average, choose only 2.5 (Holden and VanDerhei6.6 3.2 2.2 16.0 27.8 $10,000–$20,000 26 25 23 24 23 20 28 percent of all participants in the year-end 2001 account balances tend to be small compared with typical products that guarantee a specific rate of return on the tute, February 13, 2002c. S&P 500 $10,000–$20,000 32 32 31 30 32 29 share of their assets to bond and money market funds i paym Washington, DC: U.S. General rndi Dat e A fEquity, Bond, Money, and/or Balanced Funds, le vi p c a p ents accordi tdual s rfo th ox r y i e inf sha m ear atrely l-ehol u ee nd 9 n nc g to t 2 ders e of perce 00. 0 tw h p e nt u o co plan b of t lismp h he at book value e d i e part tin n H g Accounting Office, October 1997. ic fo io pla rc dn ees tn s) an . or i F n t d irsim h s Van e t, e dat ilar m Da pirical ebase instrum rhei ha (N researc d a m o ents— vemih ber 2 ssi are reported (sng ee 0t0 H e1 nu o )lde have re ra nas one an bee ng de a Van n category, n re d we D vie sed. rre hei (Oc At no “tG y iIC n e tcl obe ar-e s ude and r 20 nd d i 0 n1 ) borrowing, and loan repayments. pants in the 2001 between age and account balance and likewise there is a ing (16 percent among those with a loan option). References..................................................................................................................... their accounts (Figure 6). On the other hand, about .................. 8 All 39.0 >5–10 Y6.4 3.4 2.5 year electronically e-mailed to you or $99/year printed and mailed. ears 22.6 25.3 are primarily young workers or workers with short 120 account balance (net of plan loans) for all participants in 2001 (2002). . Chicago, IL: Ibbotson Associates, 2002. 33 ICI Perspective. Any views expressed in this report >$20,000–$30,000 26 27 25 26 25 22 privileges. >$20,000–$30,000 In the 2001 EBRI/ICI database, 80 percent 28 27 26 26 28 26 101– Age500 44.7 otherwise. Records were encrypted to conceal the iden- 12.2 5.1 4.1 19.5 10.5 shown. Figure 3, Domestic Stock Market Indexes, see Holden and VanDerhei (2001a; 2001d).50s 37.7 the entire year-end 2001 EBRI/ICI database is (2001c)). In addition, the preliminary analysis found6.4 3.7 2.6 23.8 25.0 ________. S&P 500 Index: New York, NY: Standard & Poor's. 2 othe fo th 000 is r a c Building Futures, Volume III: Company and GICs and/or Other Stable Value Funds an r stable , 54 o alysis. In m .2 p p leval e te rcen di u ad e scussi t funds.” d of p ition o an rticipan , fo of Tr o h E e “othe B ne ts with R d I/a Ita prov C r” cate I n fio n d equ iig d nory is t er, gs a ity “year n fund d hot e s of s 52.0 her residu has p d ’ aex researc rticip al for ot posu 12.9 ation database have more than 80 percent of their account re to h her investm on ” t equ are he rel ities th u 5.1 sed fo atie ons nts such as real e ro r the ten hi ugh p 3.4 b co etw m ure een c pan va y sto 25.2% riable. o state funds. T ntri ck and bution /or rath ee s contributions. In contrast, for older participants, invest- invested capital over the life of the contract—and other Sources: Tabulations from the EBRI/ICI Participant-Directed Retirement Plan D Russell 3000 ata Collection than the base group, and lower their allocation to equity 28 For more information about subscriptions, visit our Web site at Asset EBRI/ICI database positive correlation between tenure and account bal- 16 percent have more than 80 percent of their account Figures............................................................................................................................................. 9 tenures. In contrast, those with account balances in >$30,000–$40,000 This research uses data gathered by the Employee 25 • 27 The change in account balance in 2001 again varies with participant age. For example, the 25 26 25 23 the EBRI/ICI database—$43,215 at year-end 2001 ________. “Company Stock in 401(k) Plans: Results of —is Source: Tabulations from the EBRI/IC 3 I Participant-Directed Retirement Plan Data Collecti >$30,000–$40,000 on Project. 23 24 23 23 24 23 Cohort Zero 1–10% >10–20% >20–30% >30–40% are those of the authors and should not be ascribed >40–50% >50–60% >60–70% >70–80% >80–90% >90–100% Send an issue to 15 of participants are in plans offering loans. However, as Median T tity of employers and employees but were coded so that enure: 6 Years Stock and 401(k) Plans, Supplemental Report. December 1996–December 2001 Participant-level research using administrative data b f and I ia60s 29.8 nn lan a t sal501– l categor h cied s a e ry 1,000 38.7 f fund ) f su ort y, g , s. In “u g EB est nkn R add sI t an own hitio at d hi ,IC n ” con g , 48 .................................... I h e have r ear .5 sists of p col ene rcen rs t l ect fu t e nd o ed nfd s Boston, p dat tth a orticip co at cou a fnt rom an ri 6lbut d ts in so no e me of their m hi t th b explained, in part, by the different tenure Investment Company Institute. ghe e eir 12.3 id that 401(k) participants are not naïve—that is, when r 2 en perce 0s tified. So with n embers t a3.9 n go e equ5.9 s o m that se ef ad sal ity fu m a3.5 iry n rv nds h i3.3 ;strato t e h aeref sa p d rs l exp an ore supp r3.0 ,Quarterly Supplemen- e o one cor22.6 slyin ure to w d g d k oul e eq eap d e37.4 ta er uities; were s xpect and 16.119.8 Project, Cerulli Associates. 4 balances invested in equity funds, while about ment return is of greater importance because their stable value funds—synthetic GICs 31 or similar instru- www.ebri.org or complete the form below and return it to EBRI. funds, as well. Alternatively, participants in plans that Equity, Bond, Money, and/or Balanced Funds, 6 >$40,000–$50,000 100 24 26 25 26 25 22 Much of the research drew attention to the need >$40,000–$50,000 22 21 21 have 70 percent of 20 21 21 a ance. Examining the interaction of both age and tenure balances invested in company stock. Youngest and oldest 23 U.S. Department of Labor. Pension and Welfare Benefit Research Institute (EBRI) and the Investment lower than the average account balance among the a Survey of ISCEBS [International Society of Certified excess of $100,000 are primarily older workers or 17 13 average account balance of participants in their 20s consistently holding accounts increased to the officers, trustees, or other sponsors of EBRI, See the Appendix (Figure A4) for the distribution 1996 1997 1998 1999 2000 2001 Minor investment options are not shown; therefore, row percentages will not add to 100 percent. adm 5 u th 4 n Plan-sp The e ratio of acco .1 p abilni e to pro positive c est rcen rat eci o t of p rs. fic in vi The du o ea n co rrelation fo rticip t dat rm b m alan p atio a an lete asset allo ic n ts i n e to salary to bet cl on u nw d th e lo een tenur eir dem an30 prov ogra catio s; 56 rise e a ision phi n.3 p n detail o with c i d saccount is av e nrcen f salary. Howev orm nailab t certain at ofibalanc p on, la e rt for th ann icip poole e is expected because l has been the case for the six years that the EBRI/ICI u e an al r, tax e m d ts in th c asset cl ont aj code con ori rity o b ei ur tasses for one i4 o f0 th ns st; , ribu e 58 pl pan l.3 an tion o bal ng-te p s in e l or m rcen a i m nces, th rm ie sam t of ts an o e re of t m asset p p d a p lrticipan oyees have le (in h al eir locclients. cat lu ts in th d io ing nhad , a eir nd MA: Fidelity Investments, 2002b. both could be tracked over multiple years. tal Data. Source: Tabulations from the EBRI/IC published most recently includes Agnew and Balduzzi I Participant-Directed Retirement composition of the participants. While 40 percent of Plan Data Collecti faced with “n” options they do not divide their assets on Project. >$50,000–$60,000 and Company Stock1,001–5,000 39.7 24 26 24 25 24 22 43.19.1 4.8 28 percent hold no equity funds. However, about half of >$50,000–$60,0003.6 3.3 10.9 7.4 19 1924.1 19 18 33.0% 19 1817.7 account balances tend to be large relative to their annual ments—are reported as one category, “GICs and other 20s 29.1% 2.8% 2.7% 4.2% 4.3% 6.6% 6.2% 6.2% 8.1% 5.1% 24.8% offer company stock, but no stable value products, as an Figure 4, Average Asset Allocation of 401(k) Organization 7 for further financial education of 401(k) participants plan balances invested with account balances reveals that, for a given age Benefits Administration. Private Pension Plan Bulle- participants tend to be less likely to hold company stock Employee Benefit Specialists] Members,” EBRI b Company Institute (ICI) in their collaborative effort— about 16 percent in 2001 because contributions typically are large relative to existing account workers with long tenures. Forty-five percent of participants with account balances in 1999, 2000, and EBRI-ERF, or their staffs. Neither EBRI nor EBRI- Allocation of plans, participants, and assets by investment a >$60,000–$70,000 loan balances. 50s; On m n vond io rtu ly re tim an a iscrim p lly all of ld an 5 es in to accum 2in .3at p wh th io ercent e sm n ich ru 23 u at least les con late an a all p of pa 26 lan rt s9 it s). So c ccount r 0 24 ain i p pant e t rcen m hs 25 ese i e balance p n t of all p t lh an h24 iei gh-in s r with .60s Howeve 21 lco an . F ou m asse u t th ert in he r, a is in ts co drm ivrollove iform ore, d uu ld a ls’ ab b 4 ation are e 8 r id .6 from en ility t perce tifi a pre classified as e o nd sav t of were in vious em pa e. Th rtic cluded e con i ha p pl ant oyer’s vtis ribu n in th wi g a lo ttion h plan c e tan w fin limit o pr aor o l ov uld i EBRI/ICI s (electiv fe is wer io nterfe n if years an e re y Guaranteed in 30s vestment c 16ontr 23.4acts. 3.3 3.1 4.4 4.9 Name databases have tracked 401(k) plan participants’ loan 7.0 >$60,000–$70,000 6.7 6.8 16 8.2 17 175.8 16 26.5 17 17 Data provided for each participant include partici- (2002); Mitchell and Utkus (2002); The Vanguard the participants in the year-end 2001 EBRI/ICI among all “n.” Indeed, less than 1 percent of Minor investment options are not shown; therefore, row percentages will n participants with no equity funds hold equity securities ot add to 100 percent. contributions. In addition, some participants in their 60s stable value funds.” 80 The “other” category is the re- investment option have dramatically lower allocations to Accounts, by Participant Age, 2001>5,000 38.9 ............................... 75.9 293.3 2.4 22.4 26.4 Gravelle, Jane G. “Employer Stock in Pension Plans: tin, Abstract of 1998 Form 5500 Annual Reports. Equity, Bond, Money, and/or Balanced Funds, ________. “Mutual Funds and the U.S. Retirement and the benefits of diversification. For example, see Special Report (Employee Benefit Research Institute, directly or indirectly group, average account balances increase with tenure. compared with other age groups—41 percent of partici- balances and more than offset investment returns. Relative to contributions, investment ERF lobbies or takes positions on specific policy participants have account balances of less than the EBRI/ICI Participant-Directed Retirement Plan Data >$70,000–$80,000 26 25 23 24 23 21 2001. >$70,000–$80,000 16 15 15 14 15 15 Address part o dat d with this positive c f e tenu ferral lim aibases 40s cipre anwith .t iiSource: Tabulations from the EBRI/IC n ts in t h ne o In equ plo tern an rrelation because 25.8 ity fu has al Reven an nds h out 4.2 a u st d ea exp Cod ndi a roll ng o e 3.6 s ure to (IR lo over aC) Sec. 402 n bal eq coul 4.9 I Participant-D u ance. ities th d gi T (g ve a h 5.2 ro ); is to ugh m short tal con a co y irected Retirement un -m 7.2 tenure e derst p tan ribu y sto attie m o 6.9 t n ployee c h lim k e an num its in Plan Data Collecti d/a high o ber 6.6 r IRC Sec. balan of acc pl ced ans 7.4 ount bala fu 41 offe nd 5(c)) on Proj s; rin 5.2 5 nce. The g1 an l .9 p od a ect. nesrcen 22.8 (ro e r is t options. Source: Tabulations from the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. b 27 activity, few participants have loans outstanding. At pant date of birth, from which an age cohort is assigned; Group (2002); and Fidelity Investments (2002a; database have five or fewer years of tenure and participants followed a “1/n” asset allocation strategy. Guaranteed i and Company Stock, and GICs and/or nvestment contracts. through balanced funds and/or company stock. may be making withdrawals. sidual for other investments such as real estate funds. 4 equity funds and balanced funds than the base group. Economic and Tax Issues. ” Washington, DC: U.S. Department of Labor, >$80,000–$90,000 a 8 23 CRS Report for Congress 25 23 24 23 Winter 21 Market in 2001.” ICI Organization January 31, 2002d). Fundamentals. Vol. 11, no. 2 All 39.0 Mitchell and Utkus (2002); Eschtruth and Gemus 6.4 3.4 >$80,000–$90,000 2.5 14 1422.6 14 in equity securities— 13 14 1425.3 For example, the average account balance of participants 50s 30.0 4.9 4.0 5.2 5.4pants in their 20s with company stock as an investment proposals. EBRI invites comment on this research. 7.1 6.7 6.0 6.4 4.4 19.8 Figure 5, Average Asset Allocation of 401(k) Collection Project. Note: Percenta The EBRI/ICI data collection project returns are more significant for older participants, and the average account balance among ges may not add to 100 percent because of There is wide variation in 401(k) participants rounding. ’ $10,000 in the 401(k) plan at the participant’s current p of som n The a ond pa rticip eiscrim rt discerni li ac an ti ep st ts elig ant U.S inat sble evide wi io .ib De n tle h ru pa bet for lo les (Actual Deferral rt n w m ce ee e an nt of n t s) b of La rollover asse wo ecau an bo d sr e so fi(ve WPercen m y its a ne ears te p r m l20 an o of tag n s m 0 t g 1 e e – th an n a 2 u y h e p 0 re d A 0; 53 2 a articip ) vc e et u .4 soffered, tal i p m an C earcen ts with o te nt of t ri b t o b uh u t f acco e t p had ion Perce uni articip un n verse ot pbalance an articip n o ts with ta f ge 40 an s 1 (A greater t ( t tak b kDP/ e )- tt w y eA een pe ou Ch pl P t, a plan an $100,000 as fi )ans ve i and s f lo o 1 ran 0 pl . aIt n- Account balances are participant account balances held in the 401(k) plans at the participants’ year-end 2001, only 16 percent of those eligible for loans Other Stable Value Funds 39.0 participant date of hire, from which a tenure range is 6.4 3.4 2.5 22.6 25.3 2002b). City/State/ZIP >$90,000–$100,000 22 24 22 23 22 20 18 percent have more than 20 years of tenure (see >$90,000–$100,000 13 13 12 12 13 12 24 8 60s 40.6 5.8 4.3 5.1 4.9 6.1 5.5 4.6 4.6 3.1 15.5 (Congressional Research Service, September 4, 2002). The final category, “unknown,” consists of funds that 2001–2002. (Investment Company Institute, June 2002). Finally, in those plans that offer both company stock and Source: Tabulations from the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. (2002); U.S. General Accounting Office (2002a; the sum of equity Accounts, by Investment Options, 2001 See the Appendix (Figure A5). In addition, in their 60s with up to two years of tenure is $14,275, is lik y year 1 n On ears o ond perce av 199 ely th iscr f n erag t t im 8. eof t nu at this o Fo in e, asset allo re at h r 1 em ;io 57 998 n have t ru m .9, issio pe les it r catio rce w in en participants in their 60s fell about 9 percent in 2001. However, some participants in their 60s po o is small as th I n o R trn tr of C ed fe o pa fSec. 40 3 p we 0 a rt 0 rticip r y i........................ ,c 59 ip ears 1( 3 an e U.S. Gen an k) 401 ts with o ts an f t (k missin d e)- nSec. b u typ re e etween g an ral Accou e 7 401 salary pd lan 2 (m 10 s, co perce )) aim option held no company stock, compared with 33 percent in an n fo v ting 15 d e n rm rt to assure 20 i ng of t atio Office years o 37 hn e is m m have bet (1 isi that em llio fm 997 tenu ilar to n ) find activ re; 6 ployees of all inc w th e e p s th 0 ee asset allo n .3 p a tat rticip weo a m rcen on an re th d t o ts, w fi catio fve an p ome ranges a ith y 95 n rticip ears o $ for tho p1 e,541 rcen an f ts s t e of is the most comprehensive source of 401(k) plan partici- current employers and are net of plan loans. Retirem account balances around the average of $43,215 at year- ent savings held in plans at previous employer, while 11 percent have balances greater • About 45 percent of the participants in the EBRI/ICI Address The Vanguard Group. A synthetic GIC consists of a portfolio of fixed- How America Saves: A Report a >$100,000 21 21 18 19 18 15 > $100,000 777777 All 1727.8 4.0 3.5 4.7 5.0 have loans outstanding (Figure 12). 7.0 6.6 6.3 7.3 5.0 22.8 assigned; outstanding loan balance; funds in the the Appendix, Figure A3), at year-end 2001, only Sources: Bloomberg, Frank Russell Company, and Standard & Poor’s. 20s 30s 40s 50s 60s All Ages Account Balances at Y could not be identified. Minor investment options areear-End 2001 not shown; therefore, row percentages will not add to 100 percent. stable value products, company stock appears to displace 40 w b ten attain with illio ith 1 u(re. su k b n th )e in asset pl ch tw e ans informatio b een en t e h 20 fits of th sat . an ofd 30 fer n, l in e 401 o year a agg ns (k s h ra eg o ) p d at f tenu ate. lan least . re; an one d 6 pl 0an .1 p pa er rt cien cip t an of p t2002b); Munnell and Sundén (2002); and Meulbroek wi articip funds, company stock, and the equity portion of balanced th anan out ts st with andi m ng o l re th oanan 30 . years of tenure. Figure A6 presents asset allocation by salary and compared with $162,042 for participants in their 60s 10 Your Nameemployers or rolled over int may be making withdrawals as well. o IRAs are not included. of participants in their 50s, although nearly 38 percent of This document is available electronically in pdf Holden, Sarah, and Jack VanDerhei. “Can 401(k) U.S. Department of the Treasury. than $100,000. pant-level data available to date. The EBRI/ICI data are Report of the Liang, Nellie, and Scott Weisbenner. “Investor Behav- end 2001. Approximately three-quarters of the on Vanguard Defined Contribution Plans year-end 2001 database are in plans offering company . Valley For a comparison of the distribution of plans, a income securities “wrapped” with a guarantee Figure 6, Asset Allocation Distribution of Participant b Source: Tabulations from the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. The Russell 3000 18 Loan activity varies with age, tenure, salary, b participant’s investment portfolios; and asset values Guaranteed investment contracts. 25 percent of the consistent subset of participants City/State/ZIP 19 For a complete bibliography, see Holden and VanDerhei (March 2003). Age Cohort equity and balanced fund holdings, and GICs and other a Sample of participants changes over time. (2002). format. To order online, visit www.ebri.org/publica- funds. Almost half of their account balances are investment options and Figure A7 presents asset with at least 30 years of tenure (Figure 11). Similarly, Source: Tabulations from the EBRI/ICI Participant-Directed Retirement participants in their 60s held no company stock Source: Tabulations from the EBRI/ICI Participant-Directed Retirement Accumulations Generate Significant Income for Department of the Treasury on Employer Stock in unique because they cover a wide variety of plan admin- Source: Tabulations from the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Minor investment options are not shown; therefore row percentages will not add to 100 percent. ior and the Purchase of Company Stock in 401(k) participants in the 2001 EBRI/ICI database have account Forge, PA: The Vanguard Group, Vanguard Center for measures the performance of the 3,000 largest U.S. companies based on total market capitalization. stock as an investment option. More than half of these Account Balance to Company Stock in 401(k) Plans participants, and assets in the EBRI/ICI database • At year-end 2001, the average account balance (net of plan loans) for all participants was (typically by an insurance company or a bank) to While the previous section examined the changes in account balance, and plan size. Of those participants in attributed to those funds. An account balance for each b Plan Data Collection Project. a b Plan Data Collection Project. stable value funds appear to displace other fixed-income Guaranteed investment contracts. tions or call EBRI Publications at (202) 659-0670. Source: Tabulations from the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Row percentages may not add to 100 percent because of rounding. All indexes are set to 100 in December 1996. invested in equity funds, 17 percent in company stock, allocation by plan size and investment options. Future Retirees?” ICI the average account balance of participants in their 40s 401(k) Plans. No. 3055. Washington, DC: U.S. Depart- Perspective, Vol. 8, no. 3; and (Figure 7). Plans—The Importance of Plan Design.” Retirement Research, 2002. NBER istrators and record keepers and, therefore, a wide range balances that are lower than the average. Indeed, participants hold 20 percent or less of their account With Company Stock, 2001 Mail to: EBRI, 2121 K Street, NW, Suite 600, Washington, DC 20037 ............................................ $43,215, and there is a wide distribution of account balances around that average. 8 average account balances among participants with Mail to: EBRI, 2121 K Street, NW, Suite 600, Washington, DC 20037 or Fax to: (202) 775-6312 19 20 28 18 24 22 29 11 15 10 17 21 13 30 16 26 12 14 27 23 31 25 8 4 3 9 5 2 6 7 or Fax to: (202) 775-6312 EBRI Issue Brief Number 255 • March 2003 • © 2003 EBRI 8 10 18 4 14 6 16 2 12 March 2003 • EBRI Issue Brief March 2003 • EBRI Issue Brief March 2003 • EBRI Issue Brief March 2003 • EBRI Issue Brief March 2003 • EBRI Issue Brief March 2003 • EBRI Issue Brief March 2003 • EBRI Issue Brief March 2003 • EBRI Issue Brief March 2003 • EBRI Issue Brief March 2003 • EBRI Issue Brief March 2003 • EBRI Issue Brief March 2003 • EBRI Issue Brief March 2003 • EBRI Issue Brief March 2003 • EBRI Issue Brief March 2003 • EBRI Issue Brief March 2003 • EBRI Issue Brief March 2003 • EBRI Issue Brief March 2003 • EBRI Issue Brief 13 19 15 17 11 9 5 7 3 >10,000 >$100,000 >$100,000 All Plans >10,000 All Plans Dec-96 Mar-97 Jun-97 Sep-97 Dec-97 Mar-98 Jun-98 Sep-98 Dec-98 Mar-99 Jun-99 Sep-99 Dec-99 Mar-00 Jun-00 Sep-00 Dec-00 Mar-01 Jun-01 Sep-01 Dec-01 Average Account Balance Percentage of Participants Size of Account Balance Percentage of Eligible 401(k) b Index Participants With Loans Issue Brief Percentage of Percent 401(k) P age ofa 401(k) P rticipants W articipant ith s With Ratio (percentage) Account BaA lances More Than $100, ccount BRat alances Less Than $10, io (percentage) 000 000 Percentage Percentage o Rat f io (percentage) Percentage Issue Brief of Participants Plan Assets of Plans

Volume 255

Pages 51

EBRI Issue Brief

Sarah Holden

Jack VanDerhei

Retirement