More than 7 percent of 401(k) assets at year-end 2007 were invested in lifecycle funds and one-quarter of 401(k) participants held lifecycle funds, according to analysis by the nonpartisan Employee Benefit Research Institute (EBRI) and the Investment Company Institute (ICI). The findings are part of the annual update of the EBRI/ICI 401(k) database, the largest of its kind, and represent the two groups' first application of the database to examine investors' use of lifecycle funds.

• The bulk of 401(k) assets continued to be invested in stocks. On average, at year-end 2007, about two-thirds of 401(k) participants’ assets were invested in equity securities through equity funds, the equity portion of balanced funds, and company stock. About one-third was in fixed-income securities such as stable value investments and bond and money market funds. Although these relative shares have changed little over the past 12 years, the underlying fund composition has changed over time.

• About two-thirds of 401(k) plans included lifecycle funds in their investment lineup at year-end 2007. New analysis shows that at year-end 2007, more than 7 percent of the assets in the EBRI/ICI database were invested in lifecycle funds and one-quarter of 401(k) participants held lifecycle funds. Also known as “target date” funds, they are designed to simplify investing and automate account rebalancing.

• New employees continued to utilize balanced funds, including lifecycle funds. Across all age groups, more new or recent hires invested their 401(k) assets in balanced funds, including lifecycle funds. At year-end 2007, 28 percent of the account balances of recently hired participants in their 20s were invested in balanced funds, compared with 24 percent in 2006, 19 percent in 2005, and about 7 percent in 1998. At year-end 2007, almost 19 percent of the account balances of recently hired participants in their 20s were invested in lifecycle funds compared with 16 percent at year-end 2006.

• 401(k) participants continued to seek diversification of their investments. The share of 401(k) accounts invested in company stock continued to shrink, falling by 0.5 percentage point (to 10.6 percent) in 2007. That continued a steady decline that started in 1999. Recently hired 401(k) participants contributed to this trend: they were less likely to hold employer stock.

• Participants’ 401(k) loan activity was stable. In 2007, 18 percent of all 401(k) participants eligible for loans had a loan outstanding against their 401(k) account, the same percentage as at year-end 2006. Most loans tended to be small, amounting to 12 percent of the remaining account balance, on average, similar to year-end 2006.

• At year-end 2007, the average account balance in the EBRI/ICI database was $65,454, compared with $61,346 at year-end 2006. 401(k) account balances varied with participant age, tenure, and salary. Individuals with account balances of less than $10,000 were primarily young workers or workers with short job tenures. In contrast, those with account balances in excess of $100,000 were primarily older workers or workers with longer job tenure.

• The year-end 2007 average account balance in the database was 6.7 percent higher than the year before, but does not accurately reflect the experience of typical 401(k) participants in 2007. To examine the experience of 401(k) participants, one must control for the impact of 401(k) plans or participants joining and leaving the database year to year. As with previous EBRI/ICI updates, analysis of a consistent sample of 401(k) participants (those that have been in the same plan since 1999) is planned; this additional analysis is expected to be published in early 2009.

Figure 5 ____ Figure 29, Asset Allocation Distribution Thus, aggregate figures in this repor Jack jobs Lifecy Van ___ and m D _. “T erh cle fun ehe Influence of Autom i is d ay not reflect the length of di usage varies with participant age and rector of research at t t ge atic he nerally time they Enrollm of 401( Emplo should not yee Ben k) Participant A en have t, Catch-Up, and IRA Contributions efit Research p te abe used nure. Young rticipated in ccount Balance to Balanced Funds, to Institu esti er participants a 40 te (EBR mate ti 1(k) pla me trends, unless otherwis I). Sarah n were (particularly am on 4 Hom l0 d1 o en (k) re likely to is sen ior ong older e Relationship of EBRI/ICI Database Plans to the Universe of All 401(k) Plans Asset Allocation by Investmen Size of 401(k) Account Balances Domestic Stock and Bond Market Indexes t Options and Age, Salary, and Plan Size Figure 15 Figure 9 Figure 11 Figure 17 Bibliography Figures Year-End 2007 Snapshot of 401(k) Plan Loan Activity Figure 3 28 Figure 42 22 Of t heir m Lifecycle funds ha ore than 1,000 m ve e bee mb ner plans, 35.6 increasingly use percent d as the had defa auto um lt i atic en nvestm roll en m t in en au t into 20 m07 atic en , com ro pllmen ared wit t plh an ab s and in out 17 plans’ hold lifec indicated. Records were en director participants, as 401(k) pla Accu by Tenure ofm y retire cu le funds than latio ...................................................................................................................... men ns at Retirement.” t and inv ol e cry der participants: 29 percen sto np r s were introduced onl ted research at th prior ICI Pers to delivery e pective Investm . Vol. 11, no. 2, and to y about en t of participan EBRI to conceal the identity of em t Com27 pany y Institu ears ago). ts in their 20s te. Lu EBRI Issue Brief is Alon held lifecy so is d............... , no. 28 iploy rector cl ee funds, rs and o3 f in 31 formation As discussed above, asset allocation vari At y The 200 ear-end 2 7 EBRI/ICI database is a representative sam 007, the average account bes with partic alance was $ p65,4 le of the estimated universe of 401( ipant age. Thus, Figure 20 54 and the median (mid-point) presents the analy account balance k) plans. At sis of Ratio of 401(k) Account Balance to Salary for Participants in Their 20s, by Tenure Tenure Composition of Selected 401(k) Account Balance Categories 401(k) Account Balances Less Than $10,000, by Participant Age and Tenure 401(k) Plan Assets Concentrated in Equity Funds Figure 45 Appendix EBRI/ICI Database Represents Wide Cross-Section of 401(k) Universe Loan Balances as a Percentage of 401(k) Account Balances 300 Bloomberg Data. New York, NY: Bloomberg, L.P. Availability and Use of 401(k) Plan Loans by Plan Size technology a perce inn vte stm of pl en a nn td resea s i linn e-up 20r0 ch data s (see Pro 5, and bases at EBRI. 10f .5 it pe Shrce aring nt o /401 fCraig C plk Co ans iun n opela 2 cil 00of Am 4 nd . Nearly is se erica (2008)). nior three-quarters of plan research ass At year-e ociate at EBRI. Speci nd s with aut 2007, 67 o m pea rce tic enrollm al thanks t nt of lifecy o ent in cle co em m ploy (Invest pared wit Older, longer ees but were coded so that bot meh nt Co 19 percent of participants in their 60s m -p tenured, and any Institute and Employ higher-i h could ncome participants tend to be tracked by ee Benef (Figure 28). it Research Institute, Jul researc More recentl hers over m have larger account balances, which are u y hired partic ltiple y 2005). Available at years. D ipants were ata provided more was $18,942 asset Figure 1, EB year-end 2007, 401(k) pla allocatiRI/ICI Dat on by investment options (Figure 6). T abase: 401(k) Pl n hs held $3.0 t ere is wide variation in 40 and also by ran Characteri illion in assets Figure 37 Figure 6 pars 1(k) plan ticipants’ tics, by , and the E Num participants’ age. Salary BRI/ICI database represents about 47 pe ber of Plan Participants, information is available for a account balances at y a ear-end r- Percentage, 2007 Figure 4 Percentage of participants with account balances in specified ranges, 2007 Percentage of participants with account balances less than $10,000 at year-end 2007 a Figure 30, Asset Allocation Distribution 401(k) plan average asset allocation, percentage of total assets, Loan Balances as a Percentage of 401(k) Account Balances of Participant Account Balance to Company selected years Stock in 401(k) for Participants With 401(k) Plan Loans, by Plan Size, 2007 401(k) plan characteristics by number of participants: Figure 40 2007 m ap utu p Sixty al fu lied au nd percent assets were tomatic en 13of the 401(k) roh llmen eldMonth-end Level, in t o DC nly t plans for which loan plo an new s (see In hires, wh December 1996 to December 2007 vestm ile 27 ent Co data pe m rcen were avail pant ap y Institu plieda au te (Octob ble in the 2007 tomatic en er 20 ro 08)). llm EBRI/ICI dat ent to all non-abase Elisabeth Buser at EBRI and Carolyn Bennett and Steven Bass at ICI, who helped prepare the figures. EBRI Issue Brief likely for each participant include date of birth, from im www.ici.org/pdf/per11-02.pdf to portant for hold lifecy Recently Hired 401(k) Plan Participants Are Less Likely to Hold Company Stock meeting their income-replacement needs in cle funds than partic and www.ebri.org/pdf/ ipants with more y whic Figure 7 h an age group bears on t riefspdf/EBRI_IB_07-20054.pdf retirem h is assigned; date of hire, from ent e job: 34 per . For long-tenured participants in their cent of participants with two which a 2007. Nearly subset of participants in the 2007 EBRI/ cent of that total. This 2007 year’ ........................................................................................................................... s update of the E three-quarters of the partici The year-end 200 BRI/ICI database intr 7 EB Ip CI datab RI/ICI database also c ants in th oduced a breakdown of the bal ase. e 2007 EBRI/ICI database have account balances that ar Because asset overs 45 percent of allocation is influenced by the anced fund categor the universe of active .................. 7 y into e 100% Snapshot of Year-End Account Balances More Than One-Third of 401(k) Participants Brady, Peter. “Measuring Retirement Resource Adequacy 35.” Journal of Pension Economics and Finance 70% for Participants With Loans, by Participant Age, Tenure, 29 Endnotes Plans with Company Stock, by Age ............................................................................................ 5% 32 participants. Percentage of 401(k) Plans Offering Loans, by Plan Size, 2007 EBRI/ICI database vs. Cerulli estimates for all 401(k) plans, 2007 14 offered a plan loan provision to participants (Figure 40). The loan feature was more commonly associated 4% 2% See Holden, VanDerhei, Alonso, and Copeland (August 2007). or fewer y tenure range is assigned; outstanding l 20s with salaries between $20,000 to ears of tenure held lifecycle funds, com oan $40,000, the m balance; funds in t pare Figure A5 d w edith 23 per ian account balan he participant’ cent of participants with five to 10 a s invest ce was $ ment portf 6,759 in b 2007 (Figure 13). olios; and asset years lower than $65,454, the size of the average account bala 401(k) investm plan p 15% ent options available to participants, Figur articipants and 12 Distribution of 401(k) Account Balances, by Size of Account Balance percent of all 401(e 21 presents ass k) plans. nce. In fact, 39 percent of The dis ettribution of a allocation by salary ssets, particip participants have account range and by ants, and lifecy This Introduction Issue Brief cle funds and non-life was written with cyc assistan le balanced funds. T ce from the Institute’s rese his Appendix, w arch an hd ed ich presents Figures A1 through A5, itorial staffs. Any views expressed in a 13% 250 (Published online by Cambridge University Press Septe Figure 13 mber 8, 2008). 16 401(k) plan participant account balances, Account Size, or Salary, 1996, 200 Are in Their 20s or 30s or Have Short Job Tenure 0, 2005, 2006, and 2007 1996–2007 Percentage of recently hired participants offered and holding company stock by age,1998–2007 Figure 2, EB RI/ICI Database: 401(k) Pl b an Characteristics, by Plan Assets, 2007 ............................ 31 7 Investm 30 with large plans (as ent Company Instit measur ute. “The U.S. Retirement Market, First Quarter 2008. eIssue Brief d by the number of participants in the plan). Ninet” y-four percent of plans with ICI Fundamentals. Vol. For the analysis of the consistent sample of 401(k) participants 10% with account balances in each and every year from Figure 36 Figure 31, More Recently 90% S&P 500 Hired 401(k) Plan Participants Hold Balanced Funds .............................32 of tenure, and t values attributed to those funds. An account hisLong-tenured participants in their 20s earning m re See portAp are pe thos 14 percent of ndie x of t Figu h 10% e a re A ut2 h participants w f oo rs, r an bald s ance hod u, l ldi f ith m not ecbalance for y be a clo ere than 30 , and scri ore th b n ed t on each participant is the sum -l an $100,000 oi t fy h ecy ears of e o cl ffi e bal cers, t tenure (Figur anc had a median account balance of $52,268. rust ed ees fun, dor use i e 29). ot of the par he n r s 20p 0 o 6n by sor age ticipant’ s of o EB f 4R 0s assets I 1,( k) updates figur balances of less than $10,000, while nearly 19 plans in the E investment options. Participant asset all es published i BRI/ICI database for 2007 is si Percentage of participants with account balances in specified ranges, 2007 Average Asset Allocation of 401(k) Accounts, by Participant Age and n the year-end 20 ocation also vari 06 report milar to percent adding t that reported f of participants have account balances greater than es with pla his new detail. n o size (Figure 22, top panel), but m r the universe of plans as esti 94% mated by uch of 1 14% Figure 22 a b doi:10 53% .1017/S1474747208003806). Available at Age Grou 1998 60% 1999 Percentage of 401(k) plan participants by age or tenure, 2007 2000 2001 2002 2003 2004 91% 2005 2006 2007 For data on 401(k) plan asset Median Account Balance s, partic1996 ipants, and plans t 2000 hroug Among Long-Tenured h 2005, see 2005 U.S. Departm 2006 ent of Labor, E2007 mployee 7 1999 m 17, no. 3-Q1 thro ore than 10, Over the past two decades, ugh 2006000 , see (Investm participants included a Holde en nt Co , Van m Dp 401(k) erh any ei, IA nplans stitute, October 2008) lon loan pro so, and have grown C vo isio pelan n, com d t (Au o be the m . Available at: p gust 20 ared 89% with 34 percent of plans wi o 07 st). widespread private-sector 89% th 10 em or fewer ployer- $70,000 a EBRI-ERF, participan ot. r their staffs. Neith Average Asset Allocation of 401(k) Accounts by Participant Age er EBRI nor EBRI-ERF lobbies or tak 87% es positions on specific policy proposals. EBRI in all funds. Figure 3, EB Among long- Plan balances RI/ICI Dat tenured participants in their aare constructe base Represent d as the sum s Wide 60s with $20, Cross-Section of 401(k) Univers of all 000 t participant balances i o $40,000 in salary n i the plan. Plan size is en.......................... 2007, the median account 8 $100,000 (Fi Cerulli Associates (Figure 3). the variation gure 7). The can be explained by Average Asset Allocation of 401(k) Accounts, variation in a differences in the ccount balances pa investm rtly ent options offered reflects the effectby s of participant age, tenure, plan sponsors. For Investment Options Among Participants With Two or Fewer Years of Tenure 85% $65,454 49% 13% 13% 20s 60.8% http://journal 61.1%s.cambridge.org/ 60.5% 58.1% action/disp 53.9% lay 1 Abstract?aid=2197036 49.6%No. 324 49.8% 45.4% 40.0% >5–10 Years 35.4% Figure 32, Many Plan Assets Benefits Securi Recentl ty Admin yi strati Hired 401(k) on (February Plan Participants Hold Lifecy 2008b). For total retirement assets, in cle Funds clud ............................ ing those in 401(k) 32 plans, through 17 48% 48% Participants, by Age and Salary, 2007 Average All 16% 14% 13% 12% 12% 80% Figure 20 a sponsored retirem 31 participants. There is little variation in participant lo www.ici.org/pdf/retm ent plan in the United rkt_update.pdf States, and n an activit ow serve as the y by plan size (Figure 41). Loan ratios vary most popular defined contribution (D C) in Ap vites co proxmme imatel nty 1 on. t 7h p is research. ercent of the participants in the database were missing a birth date; were younger than 20 years b estiE balance was m Bated as t RI Employe h e 46% e sum B $58, enefit R 028. of a ese For c at rc ive participants in the h Ilong-tenured nstitute Issue Brief participants in (ISSNplan 0887 -and, as such, does not necessarily 137 their 60s earning m X) is published monthly byo the E re than $100 mployee B represent the total en ,00 efit R 0, es the median earch Institute, 200 Distribution of Participants’ Co salary exa See mple, the percentage of plan assets Ap ,38.9% contribution behavior, rollove pe and Investment Options Among Participants With Two or Fewer Years of Tenure ndix Figure A3 for by Plan Size and Investment Options balance mpany Stock Allocations by Age d, l 78% rs from iinvested in company fecycl other pla e, and nonn -ls, asset alloc ifecy stock ris cle balanc aes with plan size. A portion of this trend tion, withdra ed fund use inw 20 als, loan act 06 by tenure ivity of 40 , and 1(k) 30s 61.9% 62.3% 61.6% 60.0% 57.2% 53.3% 52.3% 47.6% 43.6% 40.4% Percentage of account balances, 2006, and 2007 $61,346 (percentage of plan assets) the first quarter of 2008, see Investment Company Institu12% te (October 12% 2008b). For a d 12% iscussion 12% of trends be 12% tween defined 44% 20% 27% Figure 4, M 50% ore Than One-Third of 401(k) Participants Are in Their Tenure 20s or 30s or Have Short 1100 13th St. N Average Asset Allocation of Accounts, by Participant Age and Investment Options W, Suite 878, Washingt 74% on, DC, 20005-4051, at $300 per Participant Age Group year or is included as part of a membership subscription. Periodi- only Age Group slightly when participants are grouped based on the size of their 401(k) plans (as measured by the old;plan, representing the largest num or were older than 69 years old. They ber of were participants not included i and assets. In n this anal b ysis. 2007, 48.5 million American workers 28% a Figure 33, Recently Hired Participants Now Hold Higher Concentrations in Balanced Funds December 2008 .........33 num p account balance was $344, a ber of em rticipant. ployees at the sponsoring firm 849. . $58,328 40s em Brady occurs becaus Participants’ 59.8% ploy , Peter, er contribution rates. This research report 60.6% and Sarah Holden. “The U.S. Retire e allocations to com few small p 59.5% lans offered c p58.8% any stock rem om55.9% pany aFigure 19 ined stock as examines the relati ment Market, 2007.” i52.6% n line with previous an investment option. 52.0% onship ICI Fund 47.3% ybetween account balances and ears. Forty amentals For exam 43.6% -four . Vol. 17, ple, percent (or less than 1 per- 40.7% no. 3 The Typical 401(k) Plan Participant Percentage of account balances, 1998 and 2007 benefit and defined contributioPercentage of account balances, n (DC) plans, see Poterba, Venti, and 2007 Wise (May 2007) and Holden, Brady, and Hadley $60,000 cals postage rate paid in Washington, DC, and addi 2 tional mailing By Age offices. POSTMASTER: Send address changes to: EBRI Issue Brief, 1100 40% a $56,878 Th ____ is repo ___ 70% rt is bein _. Quarterly Supp g published lementary Da simultaneously ta as an . Washingt EBRI Iss on, DC: Inve ue Brief and st IC m I Pers ent Co pective mpany an I d is av nstitute. ailab le on both 18 Job Tenure 20s Salary Range ..................................................................................................................... 20s 30% All 30s 30% Lifecycle 40s 24% 50s 23% Non-Lifecycle .............. 60s 25%23 10 were active 401(k) plan num % ber of plan participants; Figure 42). 65% participants. $55,502 <100 By In the 1 year-end 2007, 401(k) pla 2 8622 years that the EBRI/ICI has be 0.19153 >30 Years 19.1532 n assets had grown to represent 17 per- en tracking loan activity 32 Percentage of account balances, 2007 Ap 100 proximately 7.1 percent of the participants in the database were missing a date of hire and were not included in this 50s 57.6% The ratio of participant account 58.8% 57.4% 57.9% balance to sal 53.9% ary is positively 51.2% 49.5% correlated with age and tenure. 45.2% 42.3% 39.6% 13th St. NW, Suite 878, Washington, DC, 20005-4051. Copyright 2008 by Employee Benefit Research Institute. All rights reserved. No. 324. 9.7 m participants’ cent of participants in small plans were offered co See illion) of the 401( (Invest Appendi m e age, tenure, and salary x nt Co Figum re k) participants in the 2007 E p A any 4 fo I r n bal stitute, Jul anced . , lify ec 2008). Availabl ycle, and BRI/ICI database were in plans that offered com n mo pn an -liy fecy stock as an investm e at clwww.ici.org/pdf/fm e balanced fund use i ent option n - v17n3 2006 am , while .pdf ong re 64 percent of cent pany ly hi red ( Novem The EBRI/ICI database includes 401(k) beDistribution of 401(k) Plans, Participants and Assets, by Investment Options, 2007 r 2006). participants of a wide range of age and t c enure. Fifty-five percent (Median Age: 44 Years) or Figure 34, Many ga nizations’ Web Recently sites at www.ebri.o Hired Partici rg/pub pants Hold lications/ib High Concentr and ww 3 w.ici.or ations in Lifecy g/perspective/indcle Funds ex.html ..........34 60% 30s Balanced Funds 22% 20% 19% 19% 19% $20,000–$40,000 $6,759Balanced $21,187 Non- $51,130 Funds $66,378Balanced Funds $58,028 c total 40% 100-500 6971 0.15486 15.4856 150 cent of all retirem among 401(k) plan participants, there has been little vari ent assets, with $3.0 trillion in assets. In an o ation. On ngoi $51,569 average, less than one-fifth of 401(k) ng collaborative effort, the Employee 60sanalysis. 54.1% 55.5% 53.6% 55.7% 51.0% 49.5% 47.8% 43.9% 40.4% 38.4% >20–30 Years GICs /Stable Figure 5, Domestic Stock a Participants in their 60s, 2 having had m nd Bond Ma orket Indexes re ti Equity me to acc Lifecycle ........................................................................ umulate assets, tend to hav Non-Lifecycle Bonds e higher ratio Money s, while those 11 Company stock as an invest p participants in plans with articipants b 54% y ag me of ent option (Figure 19). Am 401(k) p mo articip re than 5,000 participan ant. ong these ts were offer participants, 69 percent ed companyheld 20 stock as an invest percent or less of d ment option Poterba, James, Steven F. Venti, and David A. Wise. of participants are in their 30s or 40s, while 12 percen 1996 1999 “Rise of 401(k) Plans, Lifetime Earnings, and Wealth 2002 t of participants are in their 20s and 8 percent are in 2004 2005EBRI/ICI 2006 2007 at 60% The esti 40smate of the number of active 16% 401(k) plan paFigure 44 rticip 15%ants is based13% on a combinatio 13% n of data from U.S. Bureau 13% of 80 Equity Lifecycle 4 $49,024 Non-lifecycle Bond Money 5 GICs and Other Company >$40,000–$60,000 $15,510 $37,578 Lifecycle $82,667 $102,410 $97,413 Investment options offered by plan Figure A1 Plans Participants Assets 19 100 Age Group plan assets The Em 2006 501-1000 ployee 2007 Benefit Research Institut 3481 2006 b0.07733e (EB 7.73281 2007 RI) was founded in 1978. Its 2006 2007 mission is to All participants with access t 60.5% 61.0% 60.0% o loans had a 58.7% loan outstan 55.3% ding, and on a 51.6% 51.0% verage over the past 12 46.3% Lehman Brothers 42.0% years, about 14 38.7% Cerulli Associates. “Retirement Markets 2007.” Benefit Research Institute (EBRI) and the Invest Cerulli Associates Quantitative ment Company Institute (ICI) collect annual data on Update. Boston, MA: Figure 35, Asset Allocation Distribution $50,000 33 Copyright Information: This report is cop of Account Balance to yrighted by Funds the Employe Bal e Bea nef nced Funds it Research Inst Am itut ong Recentl e (EBRI). It m ya y The positive correlation bet$47,004 ween tenure and account Funds balance is expected because l Balanced Funds o Funds ng-termFunds employees have Value Funds had m Stock ore in their 20s had the lowest ratios (Figure 14). In c addition, for any given age and tenure combination, the ratio their account balances in com in 2007. T 50s hus, to analyze the potential effect of plan size, the remaining pany stock, includi 12% ng al 11% most 46 percent who held 10% >10–20 Years panels of Figure 22 none (Figure 30). On the 10% c gr 10% oup plans by their 60s (Figure 4). The median age of the participants Relationship of Age and Tenure to Account Balances Retirement.” See Appendix NBER Worki Figu 26% re A5 for t ng Paper he asset al . No. 130 location 91 (Nati of account onal Bureau of Econom in the 2007 balances (inc EBRI/ICI dat luding balaic nce Research, May 20 a dbase is 44 y , lifecycle, an ed non-lifecycle ars, the sa 07). me Labor Statistics (2007) andPercentage of Eligible Participants With 401(k) Loans, U.S. Department of Labor (February 2008b). funds Lifecycle Balanced d Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Age 401(k) Plan Asset Allocation, Account Balances, and Funds Total contribute to Equity , to encourag balanced funds 20se, and to enhanc Funds e the developmen Bond Funds Money t of sound empl Stable Value Funds GICS /Stable oyee ben Company e Stock fit Figure 6, S >60,000–$80,000 napshot of Average Year-End $33,155 About Changes in Account Balances Account Balances $64,611 $133,488 ............................................................ $160,324 $162,683 12 Equity, bond, money, and/or balanced funds Distrib 100 ution of 401(k) Plans, Par Plan Assets-- 1001-500 ticipants, 0 9054 and Assets, by 30,5090.20113 Inv 20.1128 6,358,616 estment Options in 2006 $310,823,661,806 Figure 34 Aggregate Bond Index millions of 401(k) plan pa percent of the rem 30% be used without a permission but c ining account balance was taken out rticipants as a means to a itation of the source is requ ccurately ired as a loan (Figure 43). U.S . portray how these participants . Departmmanage their ent of Labor data Hired Participants, by Cerulli Associates, Inc., 2007. Age...........................................................................................................35 a tim Investment Options, All Ages e 60 to accumulate an account balance. However, a rollover from $43,215 a previous employer’s plan could interfe >2–5 Years re with this of account ba 50% 60s ALL PLANS lance to salary varies so 10% mewhat with salar b 9% y. For example, am 8% ong p 8% articipants in their 20s, the 8% 3 a 60s Row percentages may not add up to 100 percent because of rounding. other hand, b investm alancede n fund nt options and early asset sh 8 percent had m are) in plan size. 2006 am ore than 80 ong recenpercent of their account tly hired participants by agbalances invested in c e of 401(k) participant. ompany stock. as in 2006. Although the a There is a positive correlation between age and account ge composition of 401(k) partic Funds ipants in the balance among >5–10 Years year-end 2007 EBRI/ participants covered by the 2007 ICI database is by Participant Age, Tenure, Account Size, or Salary, programs and so Funds und public policy Funds through objective 20s Funds resear Funds ch and educati Value on. EBRI is the only Stock Group See 1998 Inv Of which: lifecycle estm 2007 ent$41,156 Co 1998 mpany Institu 2007 funds an option te (Octob 2007 er 2008 2007 ). 1998 2007 1998 2007 1998 2007 1998 2007 >$80,000–$100,000 $49,002 $100,99519,615 $194,832 4,987,945 $226,266 34% $243,414,909,917 $236,612 100 When analy 100 z Participants-- ing the change in account ba >5000 lances over tim 16888 0.37516 e, it is im 37.5156 portant to have a consistent sample. 34% Many Recently Hired Participants Now Hold High Concentrations in Lifecycle Funds 32% Equity, Bond, Money, and/or Balanced Funds $39,885 p Investment optio ositiv accounts. indicate that loan am e correl Recomm ans offered by tio ended Citation n becau 17 sounts plan e a ro : Jack llo tend to be a negligible port v VanDerhei, Sar er could give56.8% a sh ah Holden, ort-tePlans 12.1% nu Luis Alons red ion of emplplan assets and that very o o, and y7.8% ee a h Craig Participants igh acco Copeland 13.6% unt b , “401( alan 6.9% ce. Th l k) Plan Asset ittle of l Aere is so sseto san am me ounts 20s 23.8% 28.0% 16.2% 18.6% 7.6% 9.4% Profit Sharin 34 g/401k Council of America. 51st Annual Survey of Profit Sharing and 401(k) Plans Reflecting Figure 7, Dist ratio tends to increase ribution of 401(k) Account slightly with salary for low-to-m Balances, by Size of Acco oderate salary unt Balance groups (Figure 15). However, at high ............................ 14 Tenure (years) private, nonprofit, nonpar Figure 33 tisan, Washington, DC-based organization committed exclusively to Plan Size by Number of Participants EBRI/ICI dat the sam 4 e as in a the base. year-end 2006 database, the tenure co Examination of the age composition of account mposition of participa balances finds that 52 percent of nts shifted to include many Loan Activity in 2007 There has been a downward trend in 401 1996, 2000, 2005, 2006, 2007 (k) plan participants’ holdings of and concentration in company stock in the ALLFigure 36, Average Asset Allocation of 401(k) Accou 36 nts, by Participant Age and Investme a,b nt Options $40,000 40W Equity, bond, money, and/or balanced funds, $37,323 ho we are >$100,000 19% 19% $52,268 $150,678 $280,624>2–5 Years $344,526 $344,849 CoEquity, Bond, Money, and/or Balanced Funds, m Deloitte Consulting, Th paring average accou e Em Allocation, Account p 100 loyee Ben Participants-- efit Research In LLP, I Balances, nt balances a nternati and Loan stitu onal F cross differen te (EBRI) is a non Activity oundation, and the Internat in 2007 t yea ,” EB pr r-end snapshots can lead to false c ofit, RI Issue non B pa rie rtisan f, iona no. 324, Decem , pu l Societ blic pol y ic ber of Certified Em y research 2008. onclusions. For organiploy zatioee n, Equity, bond, money, and/or balanced funds 25,716 5,417,288 $257,314,641,063 discer get converted into d nibl 40% e evidence Percentage of recently hired participants holding the type of fund indicated, 30s of rol istribut lover asset ions in an 20.1% s amony gi g thven e 24.5% part yiear. cipant s wi 13.5% th account bal 16.9% ances great6.6% er than $100 2007 , 7.6% 000 as 2 percent 20% This report is an update of EBRI and ICI’s ongoing research into 401(k) plan participants’ activity b public policy research and education on economic security and employee benefit issues. All Plans 20070–2 Plan Experience. Chicago, IL: Prof 27% it Sharing/4 24%01k Council of 23% America, 2008. 21% 21% salary levels the ratio tends to decline so Recently Hired Participants Now Hold Higher Concentrations in Balanced Funds 12.1% mewhat. A similar pattern occurs among participants in their 60s c 16% 16% 16% 20s Asset Allocation of Recently Hired Participants participants with account balances of m Distribution of Equity Fund Allocations dat o 66.9% are low-ten and GICs base Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. . I46.5% n th and/or other stable value funds e wa ure participants. In 2007, 7.4% ke a of th28.0% e collapse 18.6% of Eless than $10,000 were in their 20s or nr 38 percent of on in 2 9.4% 0and Participant Exposure to Equities 01, part th i5.1% c e participants had five or f ipants’ awa 6.0%reness 4.0% of t 30s h3.6% e nee (Figure 8). Si e dwer y t3.7% o diversi ears of tenure, f 5.3% ym milarly ay have 10.5% , 53 per- 5.8% 24,182 5,759,232 $333,096,281,024 Am and GICs ong Participants With T and/orother Stable Value Fund 6 15% wo ors Fewer Years of Tenure 15% 12%..........................................................36 Figure 8, Age which does not Com lobby o position of Selected r take positions on leg 401(k) Account Bala 51.6% islative pro 8.3% posals. nce Categories 11.3% 5.6% ................................... 2.9% 17.4% 14 exam O ple, the addition f which: 100 lifecy 40s Plans-- cle funds an option of a large num 20.3% ber sumof new plans 23.7% 45016 15,200 (arguabl 13.4% y a good event) t 16.1% 4,028,199o the database 6.9% $187,778,43 10.3% 7.6% would tend t 1,327 o of them h Benefit Speci av a e two or 24 few alists. er year Annual s of tenu 401(k) Benchmarking Sur re an 1996 d 4 percent of th Figure 38 8% 2000 em havey 2008 Edit ve betw 2005 een two 0–2 Yearsion an. New York, NY: Deloitte d fiv 2006 e years of tenu 2007 re (Figure 9). Report availability: This report is available on the Internet at www.ebri.org and at www.ici.org throug >2–5 h year-end 2007. a The report is divided into four EBRI’s member 24% ship includes a 25% sections cross-section of c: The first describes the EBRI/I 21% pension funds; businesses; trade associations; a,b 20% 22% CI 401(k) 1–100 Account balances are based on administrative records and cover the account balance at the 401(k) plan participant's current emp 13%54.0% 11.6% 13% 11.0% 8.8% 6.8% 13% loyer. Retirement savings 6.4% 0.1% 20 (Figure 16). 8.4% 30s increase 67.8% Of which: lifecycle d a 54.5% nd some8.0% plans s24.5% p funds an option onsors c 16.9% han Percentage of Account Balance Invested in Balanced Funds ged plan 7.6% design (se Russell 2000 e5.1% VanDe6.7% rhei (200 4.1% 2)). In a 3.2% ddi 12% tion, 3.2% some of t 4.2% his Cerulli movem 9.4% ent 4.7% Percentage of recently hired participants holding balanced fund assets, 17,058 3,925,885 1998, 2006, and 2007 $231,250,935,755 50 Equity, Bond, Money, and/or Balanced Funds, co 5 cent of participants with account balances greater th Co mm The y pared with 33 paring snapshots of newly ear-end 2007 EBRI/ICI database fi percent of participant 7.6% hired 401(k) plan s at ynds that, on ear-end pa an $100,000 were in their 50s rticipants’ 2006 average, 48 pe . In 2 asse 007, 5 t allocations provides further insight percent had m rcent of participant account balances or 60s. T 11%ore than 30 he positive years of 11% 11% 11% 11% 11% 11% 20 Equity, bond, money 50s , and/or balanced funds, 21.8% 25.0% 14.4% 17.2% 7.4% 7.8% By Jack VanDerhei, E held in plans at previous employers or rolled over into individual retirement accounts (IRAs) are not included. Account balance 100 Plans-- BRI; Sarah Holden, ICI; Luis Alonso, EBRI; and Craig Copeland, s are net of loan balances. EBRI pull down the Characteristics of Participants With Outstanding 401(k) P Consulting, 30% average account balance, LLP, 2008. Av labor un ailable at ions; h which coul e ww alth10% w.iscebs.org/pdf/401%28k%29survey_08.pdf card t e prov hen be m iders and insur ist 10% akenly described as hurting current 10% ers; lgovernment org an Loans anizations; and service firms. Russell 2000 The In >5–10 All vestm Index Fewer New Participants Hold High Concentrations in Company Stock ent Co . Taco mpan ma, WA: Frank Russell Co y Institute (ICI) is t 23% 18% he nationmpany 21% a18% l associatio . n of 19% 19% U.S. investmen 18% t 18% companies, in 18% clud 18% ing mutual 101–500 5.6% 54.4% 12.3% 7.9% 10.3% 5.9% 6.2% 0.5% Figure 37, Recently Because database; the 401(k) pla second presents a snapshot of participant n Hired s were introduce 401(k) Plan Participants d relatively recently (about 9% Are Less Likely account ba 27 years to Hold Com ago), eve lances at y 9% n olde ear-end 2007; the third looks pany r an Stock d longe........ r-tenure 37 d at 40s 64.5% 10% 53.3% 9.7% 23.7% 16.1% 7.6% 5.9% 7.1% 5.1% 3.6% 4.4% 5.3% 8.0% 5.0% $30,000 Figure 9, Tenure Com b b position of Selected 401(k) Account Balance Categories .............................. 15 may be the result of re k gulations put in place 8%4.3% by the Pension Protection Act of 8% 2006 (PPA) which resulted in regulations Age Group and Company Stoc Equity, bond, money, and/or balanced funds, >0–50 percent 44.9% 5.9% >50–90 percent 5.7% 12.8% 7.5% >90 percent 20.5% into the recent investment allocation activit tenure, com were alloc correlation between age an Long-tenured participants are used in this analysis to capture as long a work and savings history as possible. The tenure var ate pared with 6 percent of participants in 20 d to equity funds (Figure 18). Howe d account baly a of nce is expect plan ver, individual asset allocations vary participants. Balanced funds, which incl 06. The m ed because younger worke edian tenure at the current e iable tends to be years with the rs are likely widely across ude lifesty m t ploy o have lower er was six le and and GICs and/or other stable value funds 60s 20.3% Percentage of Account Balance Invested in Balanced Funds 7% 22.7% 3.5% 26,632 12.9% 7% 15.0% 5,253,422 7.4% $266,723,77 7.7% 4,069 38% 0 50s 2.9% 30s 0–2 Years fu nds, cl >10–20 osed-end funds, exchange-traded 15% funds (ETFs) 14% , and unit invest 13% ment trusts (UIT 13% s). ICI seeks t6% o enc 13%ourage participants, but actuall 501–1,000 In the 2007 EBRI/ICI data Age Group y would tell us base, 90 percent of particip 52.3% nothing abo 12.5% ut consistently participating workers. 7.4% ants were in plans offeri 2.4% 10.4% 5.3% ng loans. However, as has Similarly 6.9% , the 2.3% employees could have participated in a 401(k) plan for, at mo 18% st, about half of their ca 2.1% reers. The Revenue Act of 1978 50s participants’ 60.5% 47.7% Percentage of recently hired participants offered company stock holding the asset 11.3% allocati 25.0% ons, including a new analysis 17.2% 7.8% 6.6% of 401(k) 5% 8.3%participants’ 5.9% 4.6% use of lifecy 1.8% 6.7% 5% c 7.4% le funds; the 6.5% 5.0% current employer rather than years of participation in the 401(k) plan. Particularly among older participants, job tenure may a not reflect length of participation in 20% Equity, Bond, Money, and/or Balanced Funds, that limit the length of time participants could 24% be required to hold company stock contributed to their accounts by their 20s and company stock 36.3% 591 14.7% 2,776,741 $225,827,360,732 49.0% 4% 4%60s 4% 4% 4% All 21.0% 24.5% 13.9% 16.7% 7.1% 7.8% Of which: lifecycle funds an option 14,280 3,017,262 $150,158,822,816 lifecy y participants. For exam incomes and to have had le ears in 2007, two cle funds, have increased in popularity am years less than in 2006. Although ple, nearly ss tim EBRI’s work advances knowledge and unders 38 percent of par e to accumuong 401(k) late a bal ticipants held no the database does not contain inform ance with their current e participants. More recently 1998 equit tanding of emplo y funds, mploy while 21 percent of hired participants held er. In addition, the yee benefits and their ation on autom y are atic Figure 38, Employ 20% Fewer New Participants Hold Hi ee Benefit Research Institute. “Hgh Concentrations in Com istory of 401(k) Plans: An Update.” pany Stock FACTS from EBRI ..........................37 (Employee S&P 500 Ind Figure 10, Account Balances Incr >20–30 the 401(k) plans; the regulations for the 401(k) plans were introduced about 2 20s ex. New York, NY: Standard & Poor’ ease 11% 12% With Age and Tenure s. 10% 11% 7 years ago. ........................................................... 11% 9% 11% 9% 10%8% 15 adhe 1,001–5,000 rence to high ethical stan c dards,50.2% promote publ 10.5% ic understandi 7.7% ng, and ot 9.7% herwise adva 4.8% nce the int8.3% erests of funds 5.3% , their aggregate average account balance would tend to <100 participants a 100– 500 be pu 501– 1,000 lled down if a large num 1,001– 5,000 ber of older participants >5,000 60s cont been the case ai50.0% ned a pr42.7% ovisifor the 12 on t 12.1% hat becam 22.7% yea e rs that the EBRI/ICI databa Inter15.0% nal Revenue 7.7% Code Sec. 40 8.7% ses have tracked 401( 1(k). T 10.1% he law 7.8% went int5.7% k) pl o effect an participants, relatively 13.3% on January 11.6% 1, 4% 1985.7% 0, but 5.5% fourth focuse 30s and Company Stock, and GICs percentage of their account balance indicated in company stock, 1998–2007 s on participants’ 40.9% and/o401(k) r loan activity. 12.6% 46.5% employer; Of which: lifecycle specified rules reg funds an option arding the notification of blac 470 kout periods; an1,971,881 d required quarterly $155,719,177,317 statements that must 0 0% 30s Equity Year-End 2007 Snapshot of 401(k) Asset Allocation , bond, money, and/or balanced funds, importance to the nation’s economy among policymakers, the news media, and the public. It c 30s 20% 19% 20% 20% 20% balanced funds: 53 percent of recently enrollment, it is likel participants held m less likely Age Group >30 to have in their ore than y that >0–50 percent current plan account automatic enrollm 80 percent of their balances in equity 7% hired participants in 2007, c ent is play s rollovers fro 8% >50–90 percent ing a role i m a previous em om 8% funds (Figures n p ar bringin ed with 33 percent of g in pl n oy 7% 23 and eer’ wly >90 percent s plan. hired w 24). Furtherm recent hires i o 7% rkers, which ore, t n he % sh >5,000 areho Benefit Research Institute, lders, directors, and advisers. Mem Fe 46.2% bruary bers 2005). Available at o5.3% f ICI manage 7.9% total assets 7.4% of $10.10 trillio 3.5% n and serv 12.2% e almost 914.5% 0 million All 25 64.8% PLANS WITHOUT COMPANY STOCK, GICs, 50.9% 9.1% 24.5% 16.7% 7.8% OR OTHER STABLE VALUE FUNDS 5.7% 7.4% 4.9% 3.9% 4.6% 6.0% 8.6% 5.1% it $20,000 was no •t unThe til No bulk vem b of 4 er 198 01(k) assets c 1 that propo os n ed tinued regulatio to bns were e invested issu in s ed (see toc 25% ks. Ho On average, lden, Brady, at and y Had ear-elnd ey (No 2007 vem , ab bo er ut two- happened to r few participants made use other Stable Value Fund etire and roll s over their account of this borrowing privilege. balances. In additi At year-end 20 on, changes in th 07, onlye 18 percent of sample of recordkeepers those eligible for Dec-96 40s Dec-97 23.8%Dec-98 40.1% Dec-99 Dec-00 42.9% Dec-01 4.9% Dec-02 12.9% 7.1% Dec-03 5.0% Dec-04 2.0%Dec-05 47.0% 16.6% Dec-06 18.9% Dec-07 include notice highlighting the importance of diversificati8% on (see U.S. Joi bnt Committee on Taxation (August 2006)). Figure 39, Asset Allocation Distribution As with previous EBRI/ICI updates, analy 15 does this b of Recently y conducting sis of a Hired and p b cons ublishing policy re Partici istent sam pant Account Balance to Com ple sear of 401( cch, analysis, k) participants (those that and special reports on pany b and company Figure 11, Equity, bond, money, and/or balanced funds, s 401(k) Account tock b Balances Less Than $10, 584 000, by Participant Age and 2,587,751 Tenure $199,572,15 ............... 1,262 50s16 20s 40s 84.9% 22% 21% 7.3% 22% 22% 7.8%22% 2% 10% 23.2% d Consistent with traditional Equity Funds Company Stock investment advice, 401(k) Balanced Funds p Bond Funds lan participants are heavily GICs and Other Stable invested in eq Money Funds uity 2002 and 29 percentage of participants holdin lowers the average tenure. All There is also percent of recent hires in 1998 (Fi a positive correlation between account 48.2% g n 22.7% o equitygure 31 fu 7.4% nds var ). At ies with age, with 50 percent of participants in their 8.0% balance and tenure am year-end 2007, m 8.3% ore than one-thir 4.2% ong participants represented 10.5% d of recentl 10.6% y share Account Size www.ebri.org/pdf/publications/facts/0205fact.a.pdf holders. 20s 26.9% 27.4% 21.0% 21.3% 5.9% 6.1% PLANS WITHOUT COMPANY STOCK, GICs, a b OR OTHER STABLE VALUE FUNDS U.S. Bureau of Labor Statistics. 2006); Emplo thirds yee Ben of e 40 fit Research In 1(k) participa National Compensation Survey: E stitu nts’ assets w te (February ere 20 inves 05); tand ed i n U.S. Intern equity m sec ployee Be al Revenu urities tnefits in Private Industry in t he Serv rough ice (No equityv funds, ember 1 th0 e e , 1q 981 uity h )). e 35 50s 38.1% 13.0% 48.8% and/or changes in the set of plans for which the loans had 401(k) plan loans outstanding (Figure 43). A y keep records can al s in previous so influen years, loan activity ce the change in 40s Share of Participants' Account varies aggregate with age, O and company stock, and GICs f which: lifecycle funds an option emplo and/o c yee benef r its issues; holding educational briefings for EBRI members, congressional and have been in t Stock in 401( 30s h k) Plans with e same plan since 1999) is Co 86.0% mpany Stock, by planned; this Age 441 .................................................................. additional analy 7.6% 1,808,716 sis is exp Value Funds ected to be published early $132,196,69 6.4% 37 5,657 21.3% 50s 17% 17% 19% 19% 19% Plan-specific information on loan provisions is available for the majority of the plans in the sample (including Plans Without Company Stock, GICs /Stable Value Funds 6What we do Less Than $10,000 c >$40,000–$50,000 More Than $100,000 securities. At <$10,000 30s year-end 2007, nearl 22.5%y 39% half 25.4% (48 percent) 39% of 401( 17.1% k) pla 35% 20.1% n participants' 5.4% 35% account balances wer 5.3%36% e 20s hired 40 21 20s, 33 by77.8% the 2007 EBRI/ICI data 1(k) percent of particip 50.7% participants held lifecy 7.8% 27.4% ants in their 4 base. A partic 21.3% cle funds, while 0ipant’ s, and 43 6.1% s tenure m pe ore than on rcent of participants in their 60s hol 7.7% with an em 9.1% e-fifth held n ploy 4.9% er serves a on-lifecy 5.6% s a proxy cle fdin unds, and for g no equit the length of 3 py e r- 60s 36.4% Investment Type 12.8% 50.8% Plans Without Company Stock, GICs, Figure 12, United States, M This upda 401(k) Account te extend as rch 2007 previous f Balanc . Washington ind and/or Stable Value Funds ing es Greater Than $100,000, by s from ,t DC: U.S. Bureau of Labor Statistics, 2007. he project for 1996 throuParticipant Age and Tenure gh 2006. For year-end 2 Available at 006 re......... sults, see 16 Holden, portion of balanced fu federal agen nds, and com cy sp taff, and th any stock e news . Abomedia; ut one-thir and sponsoring public opinion survey d was in Balance Held in Company Stoc fixed-income securi s on emplo ties such k as yee average account balance. The tenure, account balance, and salary re a other stable value funds 40s re two possible explanati84.1% ons for t . Of t he lohose participants w account ba 950 lances am in plans o 8.9%ong thiffering loans, s 6,878,491 group: (1) thei the highest pe r em $555,395,167,782 pl 7.0% oyer’s 4rcentages of 01(k) plan Equity, bond, mo 60s ney, and/or balanced funds, 9% 9% 10% 11% 10% in 20 virtua09. It sh lly all of ould the sm be noted all plans). So that the me py lan ear-end 200 s without th 7 4 is in 01 form (k) data reported in this ana ation are classified as havin ly g a lo sis, b an y defi provnition, ision if do any not 0% 18 1–100 56.5% 13.0% 9.0% 10.9% 8.6% $10,000 Gustm $10,000–$20,000 an, Ala 40s n L., and Thomas Stein 23.3%32% mei25.1% er. “How Cha 32%16.9% nges in Social Security 29% 18.9% Affect Re 6.4% 28% cent Re 6.2%30% tirement 30s 77.9% 58.9% 8.4% b a 25.4% 20.1% 5.3% 7.2% 9.4% 4.8% 4.8% Table of Contents invested in equit All y funds, on average (Figure 17). A 38.8% Size of Account Balance ltogether, equit 13.3% y securities—equity funds, t 47.9%he equity cent held bot Figure 40, funds. The pe time a worker Percentage of 401(k) Plans O h lifecy rcentage of 401(k) particip has participat cle and non-lifecy ed in the 401(k) plan. benefit issues. clffering Loans, by e balanced funds ants holdin EBRI’s Educ Indeed, 64 percent of participants with account balances gation and Re no e (Figure 32). All of the Plan S quity ize, 2007 fun sear dcs also varies with tenure, h F ...................................... und (EBRI-ERF) performs increase in balanced fund with the lowest- the char 38 itable, VanD 50s erhei, Alonso, and Copelan 81.1% d (August 2007). Results for ea 10.7% rlier years are available in earlier issue 8.2% s of ICI and company Age Group www.bls.gov/ncs/ebs/sp/ebsm Of which: lifecycle stabl stock, and GICs e value investm and/or funds an option ents an 0006.pdf d bond and money722 market funds. A3,819,053 lthough these relati $289,696,013,570 ve shares have changed 20has only recently been established (79 percent of all 401(k)-type plans in existence in 2005 were established after 1989 participants with outstanding loan Thus, to ascertain what is happening t Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Tenure (years) 0–2 >2–5 balances wer o 401(k) pa >5–10 e among rticipants’ participants in their 30s, 40s, or 50s. In addition, account >10–20 balances, a set of consistent >20–30 >30 Participants 1–100 101–250 251–500 501–1,000 Number of Participants in Plan 1,001–2,500 2,501–5,000 5,001–10,000 >10,000 All Plans 60 part 101–500 icipant in the plan has an 25 outsta56.9% nding loan bal 13.1% ance. T 30% his m 7.2% ay underst 13.1% ate the num7.2% ber of plans offering loans (or Figure 13, reflect market M50s e losses or participant account activit dian Account Balance Among L 25.8% 26.9% ong-Te y in 18.3% nure Participants, b 2008. The i 19.9% mpact of the 2008 financial market y Age a 7.5% nd Salary 7.0% , 2007 . 18 >$20,000–$30,000 28% 28% 25% 25% 26% 40s 74.0% a 58.0% 9.9% 25.1% 18.9% 6.2% 8.3% 10.1% 6.0% 5.4% Trends.” NBER Working Paper. No. 14105 (National Bureau of Economic Research, June 2008). portion 60s of balanced funds, and com 77.0% educationap l, and any stock—represented about t scientific functions of the Instit 12.4% ute. EBRI wo-thirds -ERF of 401(k) plan is a tax-ex >90% 10.6%empt organization participants’ use am of less than $10,000 had f Perspective tenure and hi 20s Minor investment options are not shown; therefore, percentages do not add to 100 percent. Percentages are dollar-weighted avera ong recently 177.7 (wghest-tenure groups bein ww 0.10847 hired participants between y .ici.org/per 10.8473 ive or fewer years of tenure, spective/indg ex.h m51.9% o tml re likely ) an ear-e d EB nd 2006 and 18.2% nR o while 74 per It to Issue be i Brief nvested in equit y 7.6% ear-end 2007 resulted from (www.eb cent of participants with account balances 10.1% ri.org ges. y f /punds. The per ub 6.4% lications/ib incr ). centage of eased use (tabulations other stable val Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. of U.S lit 0–2 tle ov ue funds . Depa er the past 12 rtment of La years, the un bor Form 6% 5500 data derlying fund for 5% 999 2005))- composi or tio (2) the em 5% n has 6,759,727 ch ployee anged over tim 6% only recen $504,423,05 e. tly joine 7% 5,752 d the plan All Years of Tenure Salary Range 56,232 21,773,080 $1,425,142,471,345 Percentage of Account Balance Invested in Lifecycle Funds Number of Participants in Plan participants m p participants with five or f (percentage of participants) 501–1,000 articipants elig ust be analyzed. Future research will ex ible for loane s) b wer y ecau 55.7% ears of tenure or with se some plan 12.5% s may h am av m ine linked data to analy e o 7.6% offe re than 30 red, but 14.5% ny o part ears of tenure were le icip7.0% a zn e the consistent sam t had taken ou ss t, likely a plan p to le of loan use the . It is b 60s Annual Percentage Change in Total Return Index, 1997–2007 25.7% 26.0%Size of Account Balance 17.2% 18.1% 8.5% 7.9% 50s Figure 41, Introduction................................................................................................................... performance Year-End 2007 Snapshot of 401(k) Participants’ Account 70.3% >$30,000–$40,000 Percentage of Eligible 401(k) 52.8% on average 401(k) balances is strongl 11.3% 26.9% 19.9% 23% Plan Participants With Loans, by 7.0% 24% y affected 10.0% by 12.1% age and tenure of the indi 22% 6.5% Plan 6.6% Size, 2007 22% ..................... ............ vidual participant, 23% 38 5 “Funds” include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment product prima a 16.7% 19 rily invested in the security indicated. A Note: Percentages may not add to 100 percent because of rounding. Job tenure is generally years working at current employer, an ll 84.5% supported by contributions and grants. 8.2% d thus may overstate years of 7.3% 7 a 30s 62.7% 13.4% 6.4% 10.3% 4.8% Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. U.S. Department of Labor. asset Ofs. The share of 401(k) wh 169.9 ich: >2–5 lifecy0.10371 cle funds an option Em 10.3711 asset ployee s invested in balanced Benefits Security Adm 15% 14% funds, which 15.9% inistration. 14% include lifecycle funds, increased for the Private P 15% ension Plan 15% Bulletin, of lifecy greater than $100, participants holding no equity funds tends to fall as sal cle funds: at y 000 ear-end 200 had more than 10 6, 28 percent of recently years of tenur 579e (Figure 9). ary hired 4 increases 01(k) participants held lifecy 3,451,401 (Figure 24). $236,533,89 cle fun 3,309 ds, (whFigure 14, eth cer on Of which: lifecycle their own Ratio of 401(k) 13.5 or throug funds an option h Account Bala automatic enronce to Salary llment). In either e , by Age and vent, job tenure Tenure would ..................................... not accurately reflect actual 18 Acc •o unAbout t balan tw ces are o-thinet rds of of u40 npai 1(k) d l o plans 11.6 an balinclude ances. Th d l us 37,865 ifecy , uncle paid l funds in th oan bala 14,704,764 nces are eir inve not incl stment ulineu de $920,081,036,558 d in p a anty of year-end the eigh 20 t asset 07. 1001–5,000 Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. participation in the 401(k) plan. Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. 12.9 56.3% 11.7% 8.3% 14.0% 6.3% participants in the EBRI/ICI data collection effort fro Age Group lik loan provision than ot ely th $0 GICs are guaranteed investment contracts. >$40,000–$50,000 at this All omission is small as th her participants. Onl >0–50 percent 24.0% e 22% U.S. Gov 25.8% y 11 per ernme21% n m cent of participants with account balances of less than t A 1999 throu 17.7% >50–90 percent ccountability Office (Octob gh 2 20% 19.6% 007. 6.3% er 20% 1997) >90 percent find 6.2% s th21% at more than 60s 59.4% 49.2% 11.8% 26.0% 18.1% 7.9% 13.5% 15.1% 12.2% 7.4% About the EBRI/ICI Database ...................................................................................................................... >50–90% 5 and it would Hewitt Associates. be inaccurate Trends and Experiences in 401(k) Plans, 2007 to make a single estimate of an average 401(k) account outcom . Lincolnshire, IL: Hewitt Associates, LLC, e for 2008. % 14.6% 40s >5–10 24% 61.5% 11.6% 23% 7.1% 22% 11.4% 23% 5.4% 23% 100 Abstract of 2 Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. 86.2 005, F 0.05262 orm 55 5.26187 00 Annual Reports. Washington, DC: U.S. Department of Labor, Employee 40 Figure 42, Loan Balances as a Percentag All1eighth consecutive (k) plan participation. year. e of 401(k) Account Balances for Partici 53,931 2006 20,018,188 pants With L $1,228,033,6 oans, 22,146 22 percent he categories desc >5,000 Participants with no equi Examining the interaction of bot ld no ribe n-lifecy d. cle balanced funds, and ty fund balances 56.5% h age and tenure 11.0% may 3 pe srcent held both. till have exposure to the stock wit 7.3% h account bal 14.0% ances reveals 6.5% market through com that, for a given age pany Balances 20s New analysis show 29.9% s that at year-end 2007, more tha16.0% n 7 percent of the assets in the EBRI/ICI 54.0% database 95 perce >$50,000–$60,000 nt of 401(k) plans that offer lo19% ans had at least one 19% plan particip 18% ant with an outst 18% anding loan. 19% All 75.0% 12.4 1996 55.8% 1997 9.3% 25.8% 1998 19.6% 1999 2000 6.2% 2001 8.2%2002 10.6% 2003 5.7% 2004 5.6% 2005 2006 2007 15 $10,000 had loans outstand d ing (Fig EBRI Issue Brief ure 44). is a periodical providing exper Percentage of t evaluations of employee benefit issues and 50 EBRI/ICI 401(k) 50s Note: At 2007 year-end 2007 >10–20 . , Database the avera a ge account balance amon ....................................................................................................... 27% g all 21.8 million 401 54.2% 12.1% 26% (k) particiants was $65 8.4% 26% ,454; the median account balance was $18 14.4% 27% 7.4% ,942. 26% .........5 Figure 15, Ratio of 401(k) Account Balance to Salary for Participants in Their 20s, by 47.3% Tenure...... 19 PLANS WITH GICs AND/OR OTHER STABLE VALUE FUNDS 22 8 Of wh 271.3 ich: lifecy0.16561 cle funds an option 16.5609 S&P 500 30,500 12,305,578 $706,667,843,108 All Benefits Secu Age Group As in previous y d rity Adm ears, the EBRI/ICI data inistration, Febru >0–50 percent 56.8% ary 12.1% base for 2008a. A year-end 2007 finds that participants’ >50–90 percent vailable at 7.8% 13.6% 6.9% >90 percent asset allocation stock or balanced funds, w 36 group, average account balances tend to increase Recently by 30s Plan Size, hired participants are 2007 ............................................................................................................. 33.7% hich include l more likely to hold ifecycle fund with tenur a s. hi Indeed, 65 gh concentration of t 12.9% e. For exam percent of participants with no equit ple, the average account balance of heir accounts in bala .......... 53.4% 39 nced y >$60,000–$70,000 were invested in lifecycle fu16% nds and one-qu17% arter of 401(k) part 16%icipants held 16% lifecycle funds 17% . Also known It is possible t Investment options offered by plan hat these older longer trends, as well -tenured workers accum as critical analy Percentage of plans uslated DC plan es of employee benefit po a participants ssets, e.g., licies an possibly in a d proposals. Percentage of assets profit-shari EBRI Notes ng is a PLANS WITH GICs This system AND/OR OTHER STABLE VALUE FUNDS of classification does not consider the number of distinct investment options presented to a given >20–30 25% 26% 24% 24% 24% 8060s In Sources plan-year and c 20 Ty05 pe of (the Data latest d ....................................................................................................... ata available), on 47.0% ly 1.40s 7 11.1% percent of the 9.1% $2.4 trillion 18.5% in 401(k) 10.2% p.................... lan assets were 5 participant 20s 26 26.1% 35.4% 15.4% 21.1% 10.7% 14.3% Plans With GICs 20s /Stable Value Funds 40.1% 13.7% 46.2% 933.1 0.56959 56.9589 Percentage of 11.2% Definition of 401(k) Account 40s 32.6% 8.4 13.1% EBRI/ICI 54.3% varies considerably www.dol.gov/ebsa/pdf/200 >$70,000–$80,000 with age. 5pensionplanbulletin.pdf periodical prov Younger 16% participants tended to favo iding curren 15% t inf ormation on a 15% r eva quit riety y of emplo funds 15% , while older yee benefit to 16% participants pics. EBRI’s pl funds. At an, Figure 16, funds had i participants in their 60s wi prior t yo ear-end 2007, nearly as “ th Ratio of 401(k) e i n c target vnestments in either com trod d uct ate io” fun n of 40 th up t d Account Balance to Sala s, half (48 percent) of 1( they k) o pl two a an rp e desi feat any stock or ba years of te ugn res. ed H to ow si recently nure was $24,544 em ver ry lanced funds (F p for Participants in Their 60s, by , lify gene hired inral velstin yparticipants suc g a ,h com igure 25). F n DC d au p pl to ared with $2 an m holding balanced funds had arra ate acc ongem r exam oue Tenure nt 10,4 nt ple, 63 percent of s d rebal 57 f id n anc ...... o otr participant in perm 19 g. it s 20s particip 73.4% Equity, bond, money, and/or balanced funds an>30 t, 45.1% but rath7.3% er the typ 35.4% es of op 21.1% tion13% s presen 14.3% ted. Prelimin 16% 54.3% 3.9% ary research 7.5 4.0% 17% an 2.9% 29.2% alyzing2.3% 1.4 17%mill 9.1% ion particip 21.8% 17% 9.8% ants drawn Average Loan Balances Plans With GICs Holden, Sarah, Peter Brady, and Micha loans. In additio and/or Stable Value Funds n, only $445 million flowed ou el Hadl t of ey 401(k) . “401(k) Plans: plans as the resu A 25-Year R lt of converti etrospective.” ng a loan into ICI Perspect a ive. About Changes in Account Balances.......................................................................................................... 6 30s 22.7% 29.7% 13.7% 18.7% 9.0% 11.0% Figure 43, 30s Few 401(k) Participants Have Outstanding Russell 2000 47.7% 401(k) L 12.8% oans; Loans Tend 6.4 to Be Small, 39.5% Investment optio ns offered by plan a Percentage of plans 20 participants Percentage of assets 1–100 50s 30.4% 51.2% 9.8% 13.6% 12.7% 6.0% 4.4% 14.6% 56.9% O In an >$80,000–$90,000 ur y given year, the EB Pension Investment Report RI/ICI database, which is 14% 14% provconstructed fro ides detailed fi 14%nanci ma the l info ad rmation on th 14% ministrative records of 40 e univ14% erse of define1(k) d Investmen 60 Of which: lifecycle t Options funds an option Figure 41 30s em mopl re than 90 were participants in their 20s wi in their 60s w oy 73.5% ee co mont re likely 52.8% ri percent of their account balance invested buith m tions t 8.1% an o o in re than 30 d vest in fixed-inco of29.7% ten thout equit were years of tenure (Figure de 18.7% sigy ned fme securiti unds held e to be 11.0% supp34.9% es le quities through in balanced funds, com m such as bond e 10). 4.1% ntal to Sim ot 4.7% he ilarly, the average account balance of r em funds, GICs and ot co2.8% pl 22.9% moy pany er pl p2.2% stoc ared with 43 ans.k, balanced funds, or The 7.9% sher stable value funds, e part percent in 200 9.3% 17.1% i8.4% cipants’ bot 6,h. from • t he 20 New employees continued 00 EBRI/ICI database sugge to utilize sts that t bala he shee nced r n funds, inc umber of iln uding life vestment opt cycile ons funds. prese A nte cd ro d ss all oes no ag t i e gr nflue ou nce ps, Account Size with 20s Investm drawal/d Among participants with o entistrib Options 40s ution ............................................................................................................. (“deemed 22.8% u dtstanding istribution 27.8% 49.3% 40 of pa 1(k) loans at rtici15.7% pant 14.2% lo t an hs”). e end of 2 See 12.7% 18.0% U.S. 00 De 7, the average unpaid part 4.7% m 8.6% ent2.5% o ........................ f Labor, 9.8% Em 10.6% balance was ploy 6 ee Benefits Vol. 12, 40s no. 2 (Investment Com 46.0% pany Institute, Novem 13.1% ber, 2006). Available at www.ici.org/pdf/per12- 40.9% 10 40 Equity 101–500 1996–2007 , bond, money ...................................................................................................................... , and/or balanced funds 51.9% 11.1% 47.7% 9.3% 8 5.9% 27.1% 3.5% ............. 16.5% 21.0%39 Figure 17, 401(k) Plan Assets Concentrated in Equit 60s 28.6% y Funds 12.1% ........................................................... 59.3% 20 >$90,000–$100,000 benefit, defined 13% contributi 13% on, and 401(k) plans 13% . EBRI Fundamentals of Employee Benefit 13% 13% ________. 1638.2 Private Pension Plan Bulletin Historical Tables (February 2008b). 7.9% 40s 69.0%37 52.6% 9.4% 27.8% 18.0% About the EBRI/ICI Database 9.8% 5.0% 5.1% 3.4% 2.3% 9.5% 10.4% account balanc plans, provi Investment options are gro es des a snapshot of the 401(k) that pre-date the 401(k) plan uped into eig araccount h e not t broad categories. inclbalances across all uded in this a n Equity alysis, whic active partici funds h foc consist uses on 401(k) balance p of po ants’ accounts. The oled investments $25,000 part or m i Equity, bond, money, and/or balanced funds, coney ipan<$10,000 t fun s. On d a s (Figure 18 verage, part). For exam icipants have 12% ple, am 10.4 dist ong particip inct11% optionsants in th but, on 12% aveir 20s, the average allocation to eq erage, choo11% se only 2.5 (Hol 11% den and uity and 7 percent participants in their 40s wi Indeed, 32 30s m Percentage of Eligible 401(k) Plan Participants With 401(k) Plan Loans, by o in 1998 (Fi percent of participants in their 20s without re new or r a ecent gure 33). C th up t hires invested t o onc two entration is hi years of te 59.3% heir 401(k) asse Figure 8 nure was $16,672 10.2% ghest am equit ts iy ong recently n funds bal 10.1% ancheld lifecy ,ed f com u hired participants with lifecy nds, incl pared with $1 5.1%cleudi funds, which will tend to 2.3% ng lif 51,1 ecycle f 93 f 9.2% or participant unds. cle At be s Security 50s Adm50s inistration (Feb Lehman Brothers Aggregate Bond rua 43.3% r 23.3% y 2008a). 29.0% 15.5% 13.3% 19.8% 7.8% 43.4% 9.2% $7,4 Distribution of 95. Again, sim Plansilar to other y , Participants, a ears of nd Asset analy s by Pla sis, loan n Sizebalances as ................................................................... a percentage of account balances (net of ... 6 501–1,000 O02.p f which: df. lifecycle funds an option 51.8% 12.9% 28.2% 7.9% 5.5% 20.1% 2.5% 5.5 16.9% 15.3% 40 All 31.6% 13.8% 54.6% >$100,000–$200,000 b Programs 10%offers a straigh 9% tforward, basic explan 9% ation of emplo 10%yee benefit progr 10%ams in the 50s 33.4% www.dol.gov/ebsa/pdf/privatepensi 63.6% 47.8% 10.2% 29.0% 19.8% onplanbulletinhistoricaltables.pdf 9.2% 5.9% 5.8% 4.6% 2.8% 11.9% 13.1% $10,000–$20,000 26% 23% 26% 26% 25% amounts and GICs . The EBRI/ICI Participant-Directed Retirem and/or other stable value funds Index 43.0% ent Plan Data Collecti 26.5%on Project is the largest, 23.4% most primarily VanDerh database cont 37 publications 40s60s invested in stocks; these funds include equi ei (May 2 ains onl 001)). y t In h ad e account balances held in the d 39.5% ition, the preli 57.5% minary an ty 8.2% aly m su istual funds, bank colle 401(k) foun 12.6% d th 10.7% plans at participants’ at 401(k) pa 5.2% rticip ctive trusts, life insurance an2.5% ts are no current e 47.9% t n 12.2% am ïve—th ployers and at is, Figure 44, Percentage of Eligible Participan funds was 48 year-end 60s percent of assets, co 20 Age Composition of Selected 401(k) Account Balance Categories 07, 28 percen 20.9% t of the mpared ac ts With 401(k) Loans, 27.2% with nearly count balances 13.7% 39 percent of assets of recent by ly 18.1% Participant hired par am tici Age, Tenure, ong participants in their 60s. 7.2% pants in their 2 9.1% 0s w ere i nvested funds: at Figure 18, in their 40s w highl Relationshi y concentrated in equity securities year-end 2007, ne Average Asset p ith m of EBRI/ICI ore than 20 arly Dat Allocation of 55 percent of recentl abase years of tenure. Plans t for that age 401( o the Plan Size, 2007 k) Accounts, by Unive y hired participants holding l rgroup, as their se of All 401(k) Partici onl Plans pant Age y equit ......................................... y ................................. ifecy invest cle funds held m ment. Another 12 9 20 ore per- Equity the unpaid l 1,001–5,000 , bond, money oan balance) for participant , and/or balanced funds, 49.6% s with loans 11.6% was 12 percent at 8.7% 5.9%year-end 200 2.8% 7 (Figure 17.7% 4.5 45). In addition, The median loan balance outsprivat tandie and ng was pu $blic 4,16 s 7ectors at ye.a Th r-end e 2 EBRI Datab 007. ook on Employee Benefits is a statistical >$200,000 a 5% 5% 4% 5% 5% 60s 52.7% >$20,000–$30,000 43.7% 11.2% 27.2% 18.1% 26% 9.1% 25% 6.8% 6.7% 27% 7.2% 3.6% 27% 19.2% 26% 17.8% 23 All 43.9% 13.3% 42.8% 50s Of which: lifecycle funds an option 49.5% 30.3% 8.1% 11.6% 18.0%6.0% 2.9% 16.2% 18.5% when gi b ven “n All ” options they do n 23.2% Percentage of Account Balance Invested in Non-Lifecycle Balanced Funds ot divide th29.2% eir asset By Tenure s Figure 12 Median amo 14.5% ng all “n.” Indeed 18.9% , less than8.7% 1 percent o10.3% f participants reflects the e representativ ntrance of new plans and new participan e repository of information about indi Figure 16 ts a vidual 401( nd the exit k) pl of participants who retire or change jobs. an participant accounts. As of separate The 20 ratiacco o oin f 4 unts, and bal 01( an k) acc ced fu o othe unt nds, r pooled i bal com ance pared (atnve th w est ith cur me 24 rent nts. Si per em ce pl m n oy it larly in er) t 20 ,o 06 bon sal , 1 ad fu ry 9 al perce nds one are any n it s in not 20 an 0 p i 5ooled account n , a din cat d ab or o ou f t pre 7 perce p prim aredn ness arily t in f 1 o9 4 r98. At than 90 and GICs Younger parti cent of participants in their Holden, Sarah, Jack VanDerhei, Luis Alonso, and Cra >5,000 Account Size, or Salary, 1996, The Ty The distributi percent of their account and pical 401( /or other stable value funds cipants also had higher a Percentage of participants with account balances in specified ranges, 2007 on of account k) Plan Participant 20s without e balance in lifecy balances underscores the e 2000, 2005, 2006, and 2007 52.0% ............................................................................................ lloquit cations to balanced funds, 5.3% ycle fFigure 43 unds funds (Figure 34). Three out hi ag Copeland. 12.8% d equit ffects of age ....................................................... y exp 5.4% “401(k) Plan o particularly sure throug and tenure on account balances. In a 2.6% of 10 recentl th o Asset non-lifec lifecy Allocat 17.8% ............... cle fu y hired ycle balanced nds. Lifecy ion, Account 40 9 Cerullicle, 28.6% reference work on employ49.4% ee benefit programs and 26.2% work force-related issues. 21.7% 11.1 as in previous years, there is variation around this average that corresponds with 28.7% age (lower the older the All 69.7% >$30,000–$40,000 50.0% 7.9% 29.2% 18.9% 25% 10.3% 25% 5.0% 5.2% 26% 3.5% 2.5% 27% 10.1% 26% 11.2% 30 U.S. Government Accountabilit 10.3 10.3 y Office. “401(k) Pension Plans: Loan Provisions Enhance Participation But 5 Figure 19, Distribution Salary Range of 401(k) Plans, Participants, and Assets, by Investment Options, 2007..... 22 60s 100% a 41.9% 7.0% 11.9% 6.2% 3.6% 26.7% follow Equity, bond, money, and/or balanced funds, ed a “1/n” asset allocation strategy. Profit Shar (Mid-Point ing/401k Coun ) cil of America (2008) indicates that in 2007 the Age Group 8.9 December 31, 2007, the EBRI/ICI data 401(k) Account Balances Greater Than $100,000, by Participant Age and Tenure >0–50 percent (Median Tenure: 6 Years) base includes >50–90 percent statistical information about: >90 percent retirem invested in b Retirement savings held All O en f w t. A co hich: y Ratio of 401(k) Account Balance to Salary for Participants in Their 60s, by Tenure ear-end onds. lifecy mplete an cBal le20 funds an option anc 07 alysis o , alm ed funds in of plans at previous em st 19 prep are pooled account 51.6% ared percent ness fo of t r re h 8.3% e tiremen ac pl cou oy s invested in n ers or rolled o t wou t ba 11.3% la lnce d req s of rece u both stocks a ire esti 5.6% ver into ind nt mly ating projected balances hired 2.9% nd bonds. T ivi part dual retirem icipa 17.4% n hts in ey are classifi ent accounts th at eir 20s w ed ere Year-End 2007 Snapshot or target date funds, foll ow a predeter of 401(k) Pam rticipants’ Account Balances ined reallo 8.3 26.5% cation of assets over time to a specified targ 8.4 2007 ............................................... 15.1%$19,926 12.2% et date, 9 participants holding non-lif given age group, shorter te funds and an Balances, and Loan other 6 percent held com Few 401(k) Participants Have Outstanding 401(k) Loans; ecy Activity in 2006.” nure tends to cle balanced funds had pany mean that st EBRI Issue Bri ock as thei a higher percentage of par more r onl than 90 ef, no. 308 (I y equi percent of their account balance invested ty investm 8.2nvestm ticipants will have account ent. Twelve percent held som ent Company Institute and e >$40,000–$50,000 6% 24% 25% 25% 26% 26% participant), tenure (lower the higher the PLANS WITH COMPANY STOCK tenure of the participant), account balance (lower the higher the 8% PLANS WITH COMPANY STOCK $40,000 or less 17% Figure 14 19% 18% 17%$19,398 17% Figure 45, Loan Balances as a Percentag May Affect Income Security for Som ee of 401( .” Letter Report k) Account Balances for Partici . GAO-HEHS-98-5. Washington, DC: U.S. pants With Loans, Plans With Company Stock 0 and company stock 1.1% 12.8% 15.8% $20,000 av 20s erage nu mber of investmen 54.2% t fund options available for particip 10.4% ant contributions was 18; Hewitt 35.4% Associates (2007) $18,986 $18,942 retirement by Percentage of participants with account balances greater than $100,000 at year-end 2007 also considering retirContact EBRI ement income from Publications, (2 Social Secu 02) 659-0670; rity, defined fax publication benefit plans, 5.7 IR orders to 14% As, and (20 othe2) 775-6312. r DC plans, Equity Plans With Company Stock 21% , bond, mo investe • ney 21.8 m , and/or balanced funds, d in lif illion ecycle f 401(k) unds c plan participants, in ompared wit Percentage, 2007 h 16 percent at year-end 2006. into two sub- (IRAs) ar Defi Age Group nition of >$50,000–$60,000 e not included i categories in this 401(k) Acco n >0–50 percent unt ty hear’s update: e database. ................................................................................................... 24%Furtherm lifecycle funds ore, 24% >50–90 percent account balances ar and non-lifecycle balanced funds. 24% e net of unpaid l 25% >90 percent ................... o A 25% an balances. lifecy 9 cle Figure 20, typically rebalancing to be Average Asset 20s Allocation of mo 20.1% re conserv Loans Tend to be Small, 1996–2007 401(k) Accou a 19.9% tive and inco 13.8% nme-producing b ts, by Partici 13.8% pant Age and y the targ 6.3% et date. At y Investme 6.1% nt ear-end 2007 , in no balances of less than $10,000. For con-lifecy mE bination mploy cle balanced funds. ee Benefit Research Institute, and of lifecycle f a unds, non-life exampl cye, 88 cle balanced ICI Perspec percent of participants in th funds, tive, Vol. 13, or company no. 1 stock eir 20s with two or fewer y , (Augus as their equity investm t 2007). Avai 4.8 lable at ears ent. of 20s 51.8% 22.4% 90% >$40,000–$60,000 50.9% 6.1% 19.9% 13.8% 17% 6.1% 16% 5.0% 7.8% 16% 5.4% 4.8% 14% 15% 29.5% 11.5% account balance), and salary (lower the h 21.3% igher the participant’s salary). Overall, loans from 401(k) plans Ratio of 401(k) Account Balance to Salary, by Age and Tenure 3.9 Government Accountability Office, 20s d Of which: lifecycle 21.0% funds an option October 1997. A 50.5% 10.7% 0.8% vailable at 6.0% www.gao.gov/ $17,909 9.1%8.5% archive/1998/ 4.7% 10.9% he98005.pdf 16.3% by 30s Participant Age, Tenure, Account Size, or 62.5% Salary, 1996, 2000, 9.6% 20 Age 05, 2006, and 2007.......... 27.9% 41 indicates an average number of i Subscriptions to nvestment opt iEBRI ons o Issue Bri f 17 in 2e 007 fs are included (although, as part of if premixed EBRI portfolios membership, or as part of are 20% excluded, the a <100 participants 100– 500 501– 1,000 1,001– 5,000 >5,000 pos and company si 1–100 bly60% f 20s rom>$60,000–$70,000 s pre tock vious employment 36.3% . For refere 23% nces to such1.1% 24% researc14.7% h, see Hol 23% den 12.9% and VanDe 24%rhei (J49.0% uly16.3% 20 24% 05). For an Size 400% of 401(k) Account Balances34.3% ................................................................................................ 18.0% 3.9% 7.3% 9.0% .............. 13 26.7% Because of all of these fact • 40 • 1(k) p 56,2 30s a 32 em rticipants 16% ployors, which change the com er-spo continu 18.2% nsored 40 ed to se 19.8% ek 1(k) plan diversifica s, holdin 12.4% position tion of g their of the universe over ti 14.5% investments. 5.8% The share of me, it is not correct to 5.3% 401(k) accounts fund t 7 percent of 401(k) assets in the EBRI/ICI database ypically rebalances to an increasingly conservative por were invested tfolio as the target date of the fund (which is in lifecycle funds. Among participants in 30s tenure had account balances of less than $10,000, compared w As a result, many Balanced, lifecy 56.0% Options www.ebri.org/pdf/briefspdf >$60,000–$80,000 56.0% ........................................................................................................................ c 6.6% participants with no e le, and non-lifecy 19.8% /EBRI_IB_08-20073.pdf 14.5% 15% cle fund use varied quity5.3% funds 13% had exposure t 5.3% little by and www.ici.org/pdf/per13-01.pdf 7.9% ith 51 percent of participants in t age group am 13% o equit 5.2%y-relat 4.3% ong recently 12% ed investments throug ................ hired 12% heir 20s with 23 24.6% h 10.5% 18.3% 18.4% 30s a 55.8% 7.1% 5.5% 8.3% 3.9% 17.7% tended to be small, with the vast majority of 40 Percentage, 2007 1(k) participants in all age groups Group having no loan at all 20 40s 62.2% >30 Years 10.0% 27.8% averag Equity, bond, money, and/or balanced funds, e number of investment op $199 annual sub tions offered sis 12 cription ). Del to EBR oitte I Notes Consuand lting, LLP, In EBRI Issue Brie ternati fs. oIn na dividual l Foun cop dation ies ,a and re av th ail e able 0 Of30s which: >$70,000–$80,000 lifecycle funds an option 40.9% 26% 23% 12.6% 22% 23% 46.5% 23% analysis of the possible impact of automatic increases in pa0.8% rticipants contribution 9.0% rates in automatic en10.8% rollment plans, 101–500 46.3% 10.8% 5.6% 10.6% 11.6% 13.5% Relationshi 80% p 40s of Age and Tenure to Acc 18.9% ount 20.0% Balances ............................................................................. 13.2% 14.9% 5.7% 5.1% 13 inv • este $1.425 trillion in assets. d in company stock continued to shrink, falling by 0.5 percentage point (to 10.6 percent) in 2007. 40s usually in the fund’ presu 54.4% m >$80,000–$100,000 e that 51.8% the change in s nam 8.2% e) approaches. Non-lifecy 20.0% the average or median b 14.9% 14% 5.1%cl 12% account e balanced funds include asset allocation or hy 6.5%balance for the data 8.4% 11% 6.4% 5.9% base as a 10%18% whole reflects the 15.8% 11%brid 22.6% 18% 12.2% Figure 46, their 20s, 14 Loans From percent of their 401(k) 401(k) Plans Tend to Be Sm assets were invest all..................................................................... 26% ed in lifecycle funds, while among participants in their 41 participants. For exam between five and 10 co 40s mpany stock and/or ple, years balanced funds (F 25 percent of of tenure (Fig recently ure 11). Olde igure 26). 50.7% hired par 6.1% r work ticipants in their 20s, ers display a si 5.6% 9.4% m30s, or 40s ilar pattern. For 5.0% held m exa ore than 90 mple, 20.9% U.S. Internal Revenue Service. “Notice o 50s Percentage of eligible 401( 61.1% k) participants with loans f Proposed Rule Making, 11.0% 0–2 Years Certain Cash or Deferred 27.9% Arrangements (Figure 46). and company stock, and GICs Percentage of eligible 401(k) participants with outstanding 401(k) loans with prepa and/or yment for $25 each (for printed copies). Change of Address: EBRI, 1100 13th St. 40s 350% 40.1% 12.9% 47.0% InO tern 1998ation rders/ >$80,000–$90,000 al So 1999 ciety of Certified 2000 Em $15,246 pl 2001 oy 23% ee Benefit Sp 2002ecialists 23% 2003 (2008)21% repo 2004 rt that the av 23% 2005 erage numb 2006 er 23% of funds 2007 offered Equity Figure 21, 501–1,000 , bond, mo Average Asset ney, and/or balanced funds, Allocation of 47.2% 401(k) Accou 9.6% nts, b 3.8%y Partici 9.9% pant Salary 9.4% and Investment 18.8% see VanDerhei17% an50s d Copeland (June 2 20.8% 00 98). Fo 17% r a 21.3% discussion 16 of t 14.7% he variety of16.2% factors (e.g., t6.1% axes, saving5.1% s, mortgages, Relationshi 350% p Between Account Balances and Salary............................................................................... 60s .13 50s 53.2% 44.0% 9.8% 21.3% 16.2% 5.1% 6.9% 10.6% 8.6% 9.7% 19.4% 11.8% Holden, Sarah, and Jack VanDerhei. “T >$100,000 That continued a steady >20–30 Years declin 14% e th he I at start mpact of E ed i 10% n 19m 99 ploy . Rec er- Se ent9% lylected Investment Options on 401(k) Plan hired 401(k) p 8% articipa >20 Years nts con 9% tributed to this 50s 42.3% 5.7% 6.1% 13.3% 7.9% 50s 21.9% funds, in experience of “typical” 401(k) plan addition to lifestyle funds. b Company stock participants. is equit y in the plan’s sponsor (the employer). Money 60s, alm 60s ost 7 percent were 58.0% invested in lif NW, Suite 878, Washington, DC, 20005-4051; ecycle funds. 11.6% (202) 659-0670; fax number, (202) 775-6312; 30.4% percent of their account balances in balanced funds, c 59 percent of Am 50s ong individual participants, the allocation of participants in their 60s wi 38.1% 11.6%th two or fewer y om account balances to equities (equit pared with 26 percent of 13.0% ears of tenure had account balances of less than recently hire 48.8% y funds, com d participants pany Under E other stable value funds >$90,000–$100,000 mployee Plans.” Federal Register 22% . Vol. 46, n 22% 1.7% o. 217 (Nove 20%mb 31.6% er 10, 19 21% 81): 39.0% 22% and company $15,000 by the 436 401( Loan as a percentage of the remaining 401(k) account balance stock, and GICs k) plan 16% spon and/or sor16% s in their survey was 16% 17 in 2007 16% . 16% 16% 1,001–5,000 70% Loan as a percentage of the remain 48.5% ing 401(k) accoun 7.9% t balance 5% 5.5% 13.0% 6.9% 16.3% childre Figure A1, Distribution n) that impact replacement rates s 60s of 401(k) Plans, Participants, and Assets, b 20.6% ee Brady (2008). For 16.9% 14.6% an analysis of the y Investm 12.4% impact ent of ch Options in 2006 6.0% anges in Social Security 4.5%.42 Options ........................................................................................................................ 10.3% 10.9% ................ 24 60s 47.2% Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. 50% 35.9% 11.1% 16.9% 12.4% 4.5% 14.3% 17.9% 6.4% 13.5% 19.3% 12.9% Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Year-End 2007 Snapshot a of 401(k) Asset Allocation 32 $13,493 .....................................................................17 60s trend: they were less likely to hold34.4% employer st Fi 5.1% go uc re k. 2 7 5.1% 19.9% 12.7% 19.3% Participants’ 9.7% Asset Allocations: Preliminary Findings.” Working Paper Prepared for The Center for All The change in the average account balances in the da 60s The 2007 EBRI/ICI database covers 45 percent of the 59.5% 36.4% e-mail: subscriptions@ebri.org tabase between Me 12.8% 10.2% mbe universe of 4 rship Information: years will re 01(k) plan 40s Inquiries reg flect the change in the pa 50.8% rticipants, 30.3%arding EBRI funds consist Of which: lifecycle >$100,000–$200,00 of those funds designed to 8.7% $13,038 funds an option 0 22% maintain a sta 20% ble share price. 18% Stable valu 19% e products, su 39% 19% ch as in their 50s $10, stock, and the 9 000.or In c 60s in ontrast, onl equit 200 y p 7 ( o 24% rtio y Figure 35). about 2 n of balanced 0 percent of those i Concentrated lifecy funds) va 8.4% Figure 10 ries widely 1.3% n their 60s wi cle fund arou use ranged from th m nd the average of 68 17.5% ore than 20 17 percen years of tenure had percent for all 20.3% t of recent pp. 55544–55549. $12,810 other stable val >5,000 ue funds 43.9% 5.2% 1.9% 5.8% 12.8% 33.8% 7.6% 41.1% 21.8% Note: The analysis includes 401(k) plan participants with two or fewer years of tenure in the year indicated and in a plan offe 10 All 19.2% 20.0% Figure 18 13.3% $12,578 14.8% 50s ring company stock as an investment option. 5.9% 5.2% betwsubscriptions een 1992 and 2004 on re tiremen c t patterns, see Gustman and Steinmeier (June 2008). All Lif 54.2% estyle f 300% 50.4% unds ma 7.2% intain a p 20.0% redeter 14.8% mined risk lev 5.2% el and gen 6.3% erally u9.3% se word6.1% s such as “con 6.5% servative,” “m 50s odera 24.1% te,” or 7% 11.6% 300% 10 11 60s Asset Allocation All c and Investm 38.8% ent Options........................................................................................ 13.3% 4.9% 47.9% ......... 17 Plans With Company Stock and GICs Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. a Asset A membership and/or contributions to EBRI-ERF /Stable Value Funds llocation to Equiti 21 es Varies Widely A should be directed to EBRI President/ASEC mong Participants • Parti >$200,000 cipants’ 401(k) loan activ 18% ity was stable. 15% In 2007, 18 p 13% ercent of all 4 13% 01(k) participa 13% nts eligible for Pension and 12 percent of 60% $11,873 Retirem plans, and 47 ent Research (CPR percent of 401(k) R) Current plan assets. The EBRI/ICI project is unique Pension Policy Issues Conference, at Mia because mi Figure A2, Asset Allocatio guaranteed invest accounts of participants who are present in both All ment contracts (GI n Distribution of 401(k) Participant Acc Cs) and other stable value fun 11% years, which is the su 19% ount Balance to Balanced ds, are reported as one cate m of three factors: Funds, gory. The 5.5% Figure 22, All Of wh $11,600 ich: Average Asset lifecycle funds an option Allocation of Account Balances Increase With Age and Tenure 44.9% 401(k) Accounts, by 5.9% 100%5.7% Plan 12.8% Size and Investment Options 100% 7.5% 100%.... 25 20.5% hires in their a account balances of less than $10,000. participants in the 2007 EBRI/ICI data Asset Alloc 20s hol ation and Investment Options ding more than 90 d percent of thei base. Forty -three 1.1% r account balances in lifecy percent of participants had m 17.2% cle funds to ore tha 19.3% 20 percent of n 80 percent of 24 4.6% Average Asset Allocation of 401(k) Accounts, by Participant Age “aggressi Plans ve” in their name to indicate the fund’s risk d level. Lifestyle funds g 4.1% enerally are included in the non-lifecycle PLANS WITH COMPANY STOCK AND GICs The analysis includes the 2.0 million recently hired participants (those with two or fewer years of tenure) holding balanced f Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. AND/OR OTHER STABLE VALUE FUNDS unds in 2007; the TheAsset Allocation tendency of the acc by I ount nvestm balance ent Chairman Dallas O -to-s ptions alary ratio and Salisbur Age to , Sala pe yak at h at the ry, and Plan Size above igher salary lev address, ( ................................................ 202) 659-0670; els and t 4.3% hen fall o e-mail: salisbur ff likely reflects th y@ebri.org 21 e 20s 43.5% 10.5% 9.3% 4.4% 2.2% 9.6% 4.3% 17.0% PLANS WITH COMPANY STOCK AND GICs a c c Salary Range loans had a loan outstanding against their 401(k) account, the same percentage as at year-end 2006. M 60s ost University, Oxford OH, June 8–9 2001 2.5% . (Draft, May 2001). U.S. Joint Committee on Taxation. by a Age in 20064 of its inclusion of data pro ................................................................................................................ Asset alloc vided b Technical Explan ation dis y a wid tributio e variety n of ation of 401( of k pl H.R. 4 ) an recordkeepers and, therefore, portrays the partic, the “Pensio ipant a 40sccount bala n Protection nce .......... Act of 200 43 6,” “other” Plans With Company Stock and GICs • categor Of which: lifecycle New contributions b y is the residual for ot funds an option y the p /Stable Value Funds her investments, articipant, the em 67.3% such as real estate funds. The final categor ployer, or both; 67.5% 64.5% y, All 100.0% 100.0% 19% 19% 2.4% 100.0% recently 1.3 million recently hired participants holding lifecycle funds in 2007; and the 0.8 million recently hired participants holdin their account balances invested in equiti The analysis includes the 0.4 million recently hired participants (those with two or fewer years of tenure) holding balanced f The investment opti In a given age group, hired participants in thei Average 401(k) account balance, by age and tenure, 2007 ons tha longer tenure tends to mean th r 50s with that concentration. t a plan spons Percentage of account balances, 2007 es, while 13 pe or offers significantly rcent held no equities at all in 2007 (Fi at a higher percentage of participants will have affect how particip g non-lifecycle balanced fund unds in 1998; th ants allocate their gure 27). e 20s b (percentage of plans) alan 56.2% ced fund 41.2% categ 8.2% ory. 26.9% 16.6% 10.3% 2.3% 3.7% 2.5% 1.9% 6.7% 9.5% 22.0% 13.2% 30s 250% 51.1% 6.5% 7.2% 4.8% 1.6% 7.9% 17.5% influe Figure 23, Asset Allocation Distribution nce Distribution of Equity Fund 50% of two competing forces. Allocations a First, empirin cal of 401( d Pa resea rticipan r k) Participant Acc ch su t E gg xpos estsu tre hat to h Equities ighe ount Balance to Equit r ear ........................................ ners tend to contri y Funds, bute hig 21 her 40% $40,000 or less 20s 21.2% 18% a 26.8% 17% 12.6% 19% 16.6% b 20% 8.6% 10.3% 20% 250% a 12 18% loa ns t18% ended to be small, a 18%mounti 18% ng to 12 percent of the re 18% maining account balance, 18%on avera 18%ge, similar Figure 39 1–100 38.6% 11.1% 34% 7.3% 8.6% b 5.7% 16.6% 5.4% $10,000 as passed by the House on O 1.4 million recently hired participants holding balanced funds in 2006; and the 2.0 million recently hired participants holding Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. • activity f w hich: Total investment return on lifecy of pa clerticipants in 401(k) plans funds an option July 28, 2006, and account balances, whic of va as considered by the Senate on August 3, ry56.6% ing sizes—fro h depends on t m very 61.5% large corporations to sm he performance balanced funds in 2007. 2006. of financial markets 57.5% JCX-38- all “unknown,” in 2007. Editorial Boar consists of funds that coul d: Dallas L. Salisbury, publisher; Steve Blakely, to equitie d not s, by be ident age, editor per ified. .c Any entage views expr of par essed in t ticipants his p ,ublicati 2007 on and those of the authors should 30s 10 401(k) assets. Figure 19 pr account balances great In addition, at 56.3% 50.2% y Equity ear-end 8.9% er than $100,000. 21.4% Lifecycle 2007, 28 percent of the account balances of esents the distribution of 12.8% Non-Lifecycle For exam 8.6% Bond ple, plan about 13 2.6% Money s, participants, and assets by four com 4.8% GICs percent of participants in their /Stable recently 3.3% Compan 1.6% hired participants in their y 5.9% 7.8% b 60s with 10 or inations of 20.6% 11.1% 0 40s 48.8% 4.9%17% Tenure (years) 7.0% 4.9% 1.7% 10.6% 19.2% percen Distribution of tages o>$40,000–$60,000 f salary Participa ; thereforn e, o ts’ nCom e woul pany Stoc d e20% xpect k tAlloca he ratio tions by 23% of accoun Age t b ........................................................... alan 26% ce to salary t27% o rise with salary. Ho 28% 26 wev er, Figure A3, Asset Allocatio b GICs b a are ins 30s urance comn Distribution of 401(k) Participant Acc pany products t 16.6% hat guara 21.4% ntee a s Figure 46 p 9.1% ecific rate ount Balance to Balanced of 12.8% return on the inv 7.5% ested cap Funds, 8.6% ital over th e life of by Age ......................................................................................................................... Cerulli ................ 27 ________. “Contribution Behavior of 401(k) Plan Participants.” ICI Perspe 30s ctive. Vol. 7, no. 4, and EBRI Row percentages may not add to 100 percent because of rounding. A lifecycle fund typically rebalances to an increasingly conservative portfolio as the target date of the fund, which is usua to y ear-end 2006. a lly included in c Row percentages may not add to 100 percent because of rounding. not be 101–500 ascribed to the officers, Asset Alloca trust tion Di ees, m s43.6% term ibuti bers, or on of other sponsors of the E 11.4% Recently Hi 8.3% red m Pploye artic e Benefit Research i6.5% pant Accou 3.0% nt Ba Institute, the EBRI Educ lanc15.2% e ation and 6.3% Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. businesses— Age Group 16% Funds with a variety of investm 16%Funds Balanced Funds ent options. 16% Funds Funds 16% Value Funds Stock a Other Unknown Total 40s 06. Washingt 53.8% and on t 49.1%on, DC: U.S. h 11.0% e allocation of assets in an indi 19.6% Joint Comm 11.3% ittee on Taxation, Aug 8.3%vidual’ 2.8% s account; and 5.0% ust 3, 200 5.0% 6. Available at 1.7% 7.8%www.jct.gov/ 9.1% 17.3% x- 12.5% 50s 40% 41.1% 4.6% 7.5% 5.3% 2.2% 17.1% 19.5% 20s was invested in balanced funds, com invest fewer y % m Age Group ears of tenure had account balances in excess o ent offerings. The first category >$60,000–$80,000 0–2 18% pared with 24 >2–5 is the base group, 23% percent in 20 >5–10 f $100 which consists of plans that do not ,000 in 2007 (Figure 24% >10–20 06, 19 percent in 20 22% >20–30 12). However, about 05, an24% d about 7 >30 offer co per- mp any a 100 c Distribution of Participants’ Bala 40s -0.8%16.3% nced Fund Allocations by Age Perc 19.6% entage of Acc 9.1% ount Balance I 11.3% nvested in Equi7.2% ties 8.3% tax cod Asset e con 200% Allocation of Rece tribution limits a 28% nd non ntly Hire discrimi d Participa nation ru ntsles, ................................................................................ which aim to ensure that employees of all income rang ...... 26 es attain the contract. Loans From 401(k) Plans Tend to be Small Resear by Tenure the fund’s name, approaches. ch Fund,...................................................................................................................... or their staffs. 15% Nothing herein is to be construed as an attempt to aid or hinder the adoption 40s of any pending le ............... gislat44 ion, regulation, -1.6% A lifecy A lifecycle fund typically rebalances to an increasingly conservative portfolio as the target date of the fund, which is usuall cle fund 20s typically rebalances to 48.1% 13.8% an increasingly c 9.2% onservative portfolio as t 6.6% he target date 3.7% of the 5.9% fund, wh8.4% ich is usual 1.3% lyy included in the fund's nam included 2.7% 100% e 501–1,000 Issue Brief, no. 238 (Investment Co 39.2% mpany 12.8% Institute a 7.8% nd Employ 4.3% ee Benefit Research Institute, 2.4% 16.1% October 11.3% -2.5% to Company Stock in 401(k) Plans with Company Stock, by Age 200% -3.0% 50s 49.3% 43.2% 13.8% 19.7% 11.1% 8.6% 3.3% 5.4% 5.3% 1.9% 11.8% 13.3% 14.5% 14.0% 38-06. 60s b • pdf At >$80,000–$100,000 yea r-end 2007, the average 17% acco 33.2% unt bala21% n 4.2% ce in the EBRI/ICI da 6.8% 22% ta 5.0% base was $6 17% 2.5% 5,45 21% 28.5% 4, compare 17.8% d with Figure 24, Asset Allocation Distribution • Withdrawals, borrowing >10–20 Years , and loan repa 14% of 401( yments. k) Plan Participant Account Balances to Equity Distribution of Plans, Participan 30s 20s 50s 56.8% 9.3% $4,491 14% 17.3%ts, and Assets by Plan Size 7.4% $10,748 19.7% 14% 6.9% 14% $18,564 9.9% 3.0% 11.1% 4.9% 8.9%7.4% 1.7% 8.6% 1.0% 100% th cent am e b 11 stock, GICs, or other stabl 45 percent of enefits of ong that age group in 1998 (Fi Ath ge G e 401 participants in their 60s wi roup (k) plan, con Ze ero value funds. strain these h gure 36). At 1–20% 21% Twenty th between 20 igh-incoy m -n ee >20–40% a ine pe r-end 2007, indiv and 30 ircent of participants in t duals’ abilit yam >40–60% ears of tenure with their current em ong recent y to 20s save >10–20 Years in ly hired parti >60–80 the p he 2007 % lan. See EBRI/ICI database c >Ho ipants in their 80–ld 100% en an ploy d er had in the fund’s name, approac Year-End 2007 Snapshot or interpretative Individual 401(k) participants’ GICs are guaranteed investment contracts. hes. approaches. rule, or as legal, acco of 401( unting, k) Pla actuarial, o asset allocation to ba n Loan Activi r other such prof ty essional advice. ................................................................. lanced funds varies widely around an average of 29 1,001–5,000 Percentage of eligible participants with loans, by age, 2007 41.6% 9.1% 7.4% 4.4% 3.1% 16.9% 12.7% Ot30% her stable value funds include synthetic GICs, which consist of a portfolio o >2–5 Years f fixed-income securita, ies “w b rapped” 2001). 60s 38.0% 30% 37.0% 14.3% 15.8% 8.6% 7.2% 2.6% 4.9%13% 4.9% 13%2.9% 13 27.8% % 22.2% 10.7% 15.4% b Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. c 40s 54.0% 7.4% 7.6% 7.1% 3.3% 19% 6.8% 10.7% 2.0% 0.8% 100% >$100,000 14% 16% 16% 12% 14% Figure A4, Asset Allocatio Percenta $6 ge 1,3 of4 re 6 at cen ye tly ar-end 2 hi n Distribution of Account red pa 0rt 06 ici . p 40 an1(k) ac ts in pla co ns un ot ba ffe Balan rila ng nces comp ce to Balanced Funds Am vari an ed w y stock a ith part s an ici inv pan et a stme ong Recently ge, 34% nt te op nure, an tion, d sa 2007 lary . 80 Funds, by Age, Tenure, or 60s 15.1% Salary............................................................................................... 15.8% 9.3% 8.6% 5.8% 7.2% . 27 GICs are guaran Column percentages may not add to 100 percent because of rounding. teed investment contracts. Van 20s, lifecy were in these account balances great D The 2007 EBRI/ICI database contains information erhei 150% cle (Oc 30s tfunds account obe plans—which generally r 2001) fo er than $100,000. r a com ed for two-thi $11,502plete dis $23,024 c off russi ds of their ba The percentage in er equit on of EB y fu R $42,861 on lanced fund a Inds, bond funds, /IC 56,232 401(k) plans with $1.425 trillion I ficreases to 49 ndings $62,207 an ssets, or al d ot m he oney percent for participant rs’ res m funds, and balanced funds as o earch st 19 percent of their on the relats ionshi in their 60s in assets p -10 a 15 percent (F Availability igure 18). F and Use of 401(k or exam ) Plaple, 53 percent of par n Loans by Plan Size......................................................................... ticipants held no balanced funds, while 16 percent of .29 >5,000 20s 19.2% 43.0% 2.4% 4.3% 3.8%7.1% 7. 5.1% 1% 1.9% 19.4% 16.6% 12% 48.3% 12% 19.7% EBR I Issu 50s e Brief is register 45.9%ed in the U. 7.1% S. Patent and T 8.4% rademark Office. 8.6% ISSN: 0887 4.3% -137X/90 11.3% 0887 -13 11.5% 7X/90 $ . 2.2% 50+.50 0.6% 100% with a guarantee (typically by an insurance company or a bank) to provide benefit payments according to the plan at All Minor investment options are not shown; therefore, row percentages will not add to 100 percent. Percentages are dollar-weighted $5,000 54.1% 46.4% 10.1% 20.7% 12.1% 8.6% 2.4% 4.8% 2.4% 1.8% 10.1% averages. 10.7% 18.6% 12.7% Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. VanDerhei, J ack L. Loan as a Percentage of EBRI Special Report Company Stock in 401(k) -9.1% Plans:Results of a Survey Age Group of ISCEBS All 17.1% 20.7% 9.7% 12.1% 7.4% 8.6% Column percentage Indi s may vidua not add to ls with a 100 percent because ccount balances of rounding. of less than $10,000 were primarily young work >5–10 Years ers or workers with Hired Participants, by 150% Age in 2006..............................................................................................45 bet b w een c In addition, c 60s ontribution 38.5% rat hanges in the es and sal 6.5% ary.average account bala For an 8.3% analysis o10.4% f 401(k nce between any ) p5.9% articipants’ con 17.8% tw tribu o ytion ears of t 9.7% activ2.1% h ity du e EBRI/ICI ring 0.5% the b cross- ear 100% and 21.8 m Characteristics 40s illion participants (Figure of Participants $16,672 With O 1). uMost of the plans in the datab tstanding $31,055 401(k) Plan $58,262 Loans$100,856 ....................................................... ase are small: 44 $151,193 percent of the plans 29 account balances overall. investm with m All 20% oe re than 30 nt options. Anot years of Most of the i hetenure. r 27 percent of participant 42.9% ncrease in asset 4.9% allocation to balanced funds occurred in the lifecy s were 7.1% in plans that offer GICs and/or ot 5.0% 2.0% 16.6% her stable value 18.9% cle Age A lifecycle fund typically rebalances to an increasingly conservative portfolio as the target date of the fund, which is usuall participants held m ore than 80 percent of Percentage of A their account ccount Balances in balanced funds in Invested in Company Stock 2007y included in the fund’s name, (Figure 28). At year-end ________. “ book value. 30s Can 401(k) A 10ccu .9%mulations Generat 2.5% e Significant Income for Future Retirees?” 3.9% 7.9% 20.0% I54. CI Perspe 8% ctive. 60s All Figure 25, Percentage of 401(k) Plan Pa Remaining Account Balance-11.9% rticipants Without E 20s quit 40sy Fund Balances Who Have Equity 60 All 48.2% 7.4% 8.0% 8.3% 26%4.2% 10.6% 10.6% 2.1% 0.7% 100% Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Members (Employee Benefit Research Institute, January 31, 2002). Available at short Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. job tenures. In contrast, those with account balances in excess of $100,000 were primarily older marsectional data also reflect addition of ket of 2000 to 2002, see Holden and VanD newly erhei (20 hired 04)par . ticipant accounts, subtraction of the accounts of approaches. Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Ave 100% ra50s ge Loan Balances .......................................................................................................... $20,603 $34,882 $63,783 $111,840 $194,385 .................. $191,225 29 in the database have 25 or fewer particip fund categor 12 y: lifecycle fund assets accoants, and 31 unted for 16 percen percent of the account balance assets of recently t have 26 to 100 participants. In contrast, only hired funds as an invest Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. ment option, in addition to the “base” options. Alternatively, 13 percent of participants aGroup 2007 Zer, 47 o percent of 40 1–10% 111(k) –20%participan 21–30%ts held balanced funds, com 31–40% 41 25% –50% 51–60% pared w 61–ith 41 70% p71– ercent of participants at 80% 81–90% 91–100% 20% Vol. 8, n a o. 3, and EBRI Issue Brief, no. 251 (Investment Company Institute, and Employee Benefit Figure A5, Average Asset Exposure, by 40s Zero (No Loan) Participant Age or Tenure, 24% Allocation of 10.8% 401(k) Accou 3.4% 2007 90% ........................................................................... n 4. ts, b 7% y Partici 78%p 9.ant Age and 1% 90% 28. Investm 4% 82% ent Options 43.6% 28 The analysis is based on samples of 1.2 million participants with two or fewer years of tenure in 1998 and 3.8 million partici c a Some recordkeepers supplying data were unable to provide complete asset allocation d pants with two or fewer years of tenure in etail on certain pooled asset a www.ebri.org/pdf/iscebs.pdf Did you The analysis is based on the 2.8 million recently hired participants (those with two or fewer years of tenure) in 2006 and the read this as a pass- . along? Stay ahead of employee benefit issues with your own subscripti on to EBRI 25GICs are guaranteed investment contracts. Minor investment options are not shown; therefore, row percentages will not add to 100 percent. Percentages are dollar-weighted 10%workers or workers with longer j 33ob tenure. averages. A lifecycle fund typically rebalances to an increasingly conservative portfolio as the target date of the fund, which is usual 29 30s ly included in the fund’s name, approaches. Appendix participants who change j 60s ....................................................................................................................... $24,544 obs or retire, $35,399 changes in th $60,525 e composition of the $105,504 plans using a gi $172,584.................. >2–5 Years ven $210,457 recordkeeper, 30 20s At year-end 64.6% 100% 208. 07 4% , 61 percent o 6.4% f balan 5.2 ced % mutual fu 4.2%nd assets were inv 3.9% 30s 2.1 ested % in equ 0.9% ities (see 0 Inv .6%estment 0 Co .4%mpany 3.2% -20 5 percent of t participants in their 20s at were in plans that offer com he plans have m year-end 2006. orp e than 1,000 any stock, A sim but n participan o st ilar pattern occurs across all age groups. able value product ts. However, participants and assets ar s, while the remaining 32 e concentrated percent of 2007. b y Relationship Betw EBRI/ICI 401(k) Database ear-en b d 2006. At yeen Account Balances and Salary ear-end 2007, balanced fund use by pa -20.5% rticipants was about evenly split between 40 Research Institute, November 2002) 1–10% . Available at 2% www.ici.org/pdf/ 7% per08-03. 5% pdf and 6% classes fo Among Participants With T GICs are guaranteed investment contracts. r on 3.8 million recentl e or more of th y hired ei partici r clien wo or pants in 2007 ts. Fewer Years of Tenure The fi . nal EBRI/ICI database i .......................................................... ncludes only plans for which at least 46 90 percent of Issue Brief 50s for only $89/ 12 ye .2% ar electronica 5.0% lly e-mailed to 6.yo 3%u or $199/ye 17.ar pr 5% inted an23. d mai 9%le 11% d. For more i 35.1%nformation Note: "Funds" include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment product A lifecycle fund typically rebalances to an increasingly conservative portfolio as the target date of the fund, which is usua -22.1% lly included in the fund’s name, primarily invested in the <0.5% Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. b 30s 59.6% 10.2% 7.6% 5.9% 4.3% 3.9% 2.2% 1.1% 0.7% 0.5% 4.0% c 50% Figure 26, Average Asset b Allocation for 401(k) Plan Participants Without Equity Fund Balances, by Institu Bibliography changes in th te, • Qu Row percentages may not add up to 100 percent because of rounding. Percentages are dollar-weighted averages. arterly S The ye ................................................................................................................... e sam ar-end uppp lemen le of r 2007 taecordkeepers, and m raver y Daag ta). e account bala arket returns. With nce in the 4% database wa respect to the latter, whether looki s 6.7 percent hig ................ her than t 47 he yea ng at t r he Minor investment options are not shown; therefore, row percentages will not add to 100 percent. Percentages are dollar-weighte in large plans. For example, 79 percent of participants are in plans with more than 1,000 participants, and d averages. participants were offered both com Co $0 mparing recently hired participants in 2007 with th pany stock and stable value products, eir similar age groups i in addition to the ba n 1998 also illustrates that se options. security indicated. lifecy abo Participants’ cle fund ut subscri Percentages are dollar-weighted averages. EBRI/ICI s and non-life >10%–20% p account balances vary tions, visit our cyc W le balanced funds: eb site at not www onl .ey bri.or with age 25 2%g or compl percent of 401 and tenure, but also with salary 5% ete the for (k) participants held lifecycle funds, m belo 2% w and re4% turn it to EBRI. . Figure 13 reports approaches. all plwww.ebri.org/pdf/briefspdf an asset 0% Note: At year-end 2007, the s could be id average account balance among all 21.8 million 401(k) particiants was $65,454; the median account balance was $18,942 entified. /1102ib.pdf . VanDerhei, Jack, and Craig Copeland. “The Impact of PPA on Retirement Savings for 401(k) Participants.” 40s 59.3% 60s 9.4% 7.2% 17.7% 6.1% 7.1% 4.4% 9. 4.0% 7% 2.4% 17.2% 1.2% 18.2% 0.8% 0 30. .6% 1% 4.5% c 26c A lifecycle fund typically rebalances to an increasingly conservative portfolio as the target date of the fund, which is usuall Sources and Type of Data c y included in the fund’s name, approaches. Endnotes 20 largest U.S. com Participant Age or Tenure before ....................................................................................................................... , but panies (the S&P 500) or the sm does not accur ...................................................................................................... ately reflect the allest expe U.S. com rience of typ panies (the Russel ical 401(k) partic l 2000), there was stock 0–2 Years ip .................. ants in 200 ..... 49 7. 28 To GICs are guaranteed investment contracts. these same pl asset Particip 13 allocati ants 1996 on to com A lifecycle fund typically rebalances to an increasingly conservative portfolio as the target date of the fund, which is usuall in ans account for 84 their 20 1997 s h pany stock and e old1998 appro percent of all plan assets. xim 1999 atel quit y 2y p f 2000 eunds w rcent of as 2001 the to lower in 2007 t Because tal assets in th 2002 mo2003 st of the pl h e an in 2007 EBR 1998, while as 2004 ans have a small num I/ICI 2005 databset allocation to ase; p 2006 y articip ber of an 2007 ts Lifecy 50% cle funds were avail >20–30% Less Than able in two-thirds of 40 2% 1(k) plans in the 3% year-end 2007 EBRI/ICI database, up 1% 2% nearly the account balances of long-tenured par 1997 10% 25 per 1998 cent held non-lifecy 1999 2000 cle balanced funds ticipants at 2001 >$40,000–$50,000 , 2002 their current em and 3 percent 2003 held bot ploy2004 ers’ h. Most of the incr 401(k) plans. R 2005 e 2006 tirement ease in 2007 50s 60.4% 9.1% 6.8% 6.0% 4.2% 4.1% 2.2% 1.2% 0.8% 0.5% 4.7% d EBRI Issue Brief For 401(k) asset figu , no. 318 ( res, see E In m vp estm loye ee Benefit Research nt Company Institute Institute, June 2008) (October 2008). . Available at d Name >5–10 Years More Than 1–10 26–50 101–250 501–1,000 2,501–5,000 >10,000 All 13.2% 3.8% 20s 5.3% 11.2% 23.0% 43.4% GICs are guaranteed investment contracts. 0% 27 Because few plans fall into this category, these percentages may be heavily influenced by a few outliers. Several organizations provi examine the experience of ded record 401(k) part s on active participants in 40 icipants, one must control for t 1(k) plans for he impact of which the 401(k) ply ans ke or pt records market volatility in included in the fund’s name, approaches 2007. Over the year as a whole, th . e S&P 500 total return index gained 5.5 percent, while 60s -30 in th ____ eir 30 61.6% ___ s ho _, "C ld 1 8.2 1% ontribut percen$10,000 t; particip ion B 6.1% ehavior of 4 ants i 5.2% n their 01 40 (k) Plan Part 3.s 6% hold 31 p 4.0% ercen icipants During Bull an t; pa 2.4 rticip % ants i1. n 3% their d 50 Bear Markets." s h 0.8% old 40 pe0 rcen .6% t; National T and 6.3% ax participants, the asset si fixed-incom from 57 perc e securities ten ent of plans in the >30–80% ze fd oed to increase (Figure 36). R r many y ear-end 2006 EBRI/ICI database plans is modest. A 4% bout 18 per ecently hir 6% cent of the pl ed 401(k) (Figure 19). 2% participants were less likely ans have assets of $250,000 These plans offered lifecy 5% to cle balanced fund use between savings held 14 at previous emy ploy ear-end ers or am 2006 and ounts rolled over to IRAs are not inclu Size of Account Balance year-end 2007 resulted from increased use of l ded in the ana ifecy lysis. To cle funds: $100,000 Figure 27, Asset Allocation to Equities Varies Widely Among Participants .................................... 29 www.ebri.org/pdf/briefspdf/EBRI_IB_06-20087.pdf Organiz d Sourceation : T abul ations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. 0 Estimates of the number of 401(k) plans and active participants are based on a combination of data from U.S. Bureau Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Sources: Bloomberg, Frank Russell Company, and Standard & Poor's. GICs are guaranteed investment contracts. Number of Participants in Plan 28 All 61.3% partic 9.ip 3% ants joi7 n.in 0% g and le 5.7 avi %ng the 4. d2% atabase ye 3.9% ar to year 2.2 . A %s with 1. prev 1% ious EBRI/ICI 0.1% up 0.5 dat % es, ana 4.0 ly% sis of particip at yan ear-end 2007. T ts in their 60s ho hese plan recordkeepers include ld the remaining 15 percent of the to mu tal assets. tual fund companies, insurance companies, and the Russell 2000 t >80% otal return index fell by 1.6 percent (F 1% igure 5). 1% Over 2007, t * he Lehm 1% an Brothers Aggregate or less, and another 31 per Association Proceedings, Ninety-Sixth Annual cent have plan assets between $250,001 a Conference on Taxation, November 13–15, nd $1,250,000 (Figure 2). 2003, hold com a funds to pany stock (Figure 37) and less likely 14. a 7 million, or two-thirds, of the participants. to hold a high concentration of t Among participants offered lifecy heir account balance in cle funds, 37 per- At y capture as long a savings hi ear-end 2006, 19 percent of 4 story as possible, onl 01(k) participants y lon held lifecy g-tenured participants are included in th cle funds, 23 percent held non-li is analy fecycle sis. 0% a Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Equities include equity funds, company stock, and the equity portion of balanced funds. Account balances are participant account balances held in 401(k) plans at the participants' current employers and are net of p of Labor Statistics (2007) and U.S. Department of Labor (February 2008b). lan loans. Retirement savings held in Sou All indexes are set to 100 in December 1996. rce: Tabulations fAddrre omss E BRI/ICI Partici pant-Directed Retirement Plan Data Collec 20s tion Project. 27 <100 participants 100– 500 34 501– 1,000 1,001– 5,000 >5,000 a consistSource: T ent sam abulations from ple of 401( EBR k) parti I/ICI Participant-D cipants (thos irected R e the at tirem hav ent Plan D e been ain ta C tollection Project. he same plan since 1999) is planned; consulting fir Figure 28, Asset Allocation Distribution ms. Although the EBRI/ICI project has collected data from 30 of 401(k) Participant Account Balance to Balanced Funds, 1996 through 2007, the universe o f Bond In Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. dex rose by 7.0 percent. a Chicago, Illi Note: Percentages may not add to 100 percent because of rounding. b 0 to 2 nois. Washingt >2–5 on, DC: National Tax Association, 20 >5–10 >10–20 04>20–30 , pp. 44–53. >30 co plans at previous employers or rolled over into individual retirement accounts (IRAs) are not included. See mpany Appe stoc ndix k (Figures 38 Figure A1 fo and 39). r distributio n in 2006 of 401(k) plans, participants, and assets by investment options b cent held them 0% at year-end 2007. Lifecycle fund assets represented 11 percent of the assets of plans offering balanced funds, and 1 However, it is i 15 mportant to note that the percent held both.tenure variable is the time that individuals have been at their current Row percentages may not add up The analysto is includes 100 percent b the 21.8 ecaus m e of roundin illion 401(kg ). plan participants in the year-end 2007 EBRI/ICI database. The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. * Less than 0.5 percent. b Au Note: Components may not add to 100 percent because of rounding. C toity m/S atic entate/ZroIPll ment ten ds to reduce the average tenure of participants in the 401(k) plan. Profit Sh aring/401k this additional analysis is expected to be published in early 2009. b The sample of participants changes over time. data provider by Age ......................................................................................................................... s varies fro 0–2 m year to >2–5 year. In addition, th >5–10 e samp >10–20 le of plans using a given provider can change. >20–30 ................ >30 30 c including li1996 fecycle fu 19 nds 97 . 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 The analy sis includes the 1.5 million participants with two or fewer years of tenure in 2007 and in plans offering company stock as an investment option. such funds in Note: R their investment lineups. ow percentages may not add to 100 percent beca Years of Tenure use of rounding. The Russell 2000 Index measures the performance of the 2,000 smallest U.S. companies (based on total market capitalization) included in the Russell 3000 Index (which tracks the 3,000 Note: Column percentages may not add to 100 percent because of rounding. Council of America (2008) reports that there is an upward trend in the number of plans that have automatic enrollment. Mail to: EBRI, 1100 13th St. NW, Suite 878, Salary Range W Years of Tenure ashington, DC, 20005-4051 or Fax to: (202) 775-6312 largest U.S. companies). Source: Tabulations from the EBRI/ICI 401(k) Participant-Directed Retirement Plan Data Collection Project. Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. d The Lehman Brothers Aggregate Bond Index is composed of securities from Lehman Brothers Government/Corporate Bond Index, Mortg Sources: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project, Cerulli Associates. age-Back Securities Index, and the Asset-Back Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Securities Index (rebalanced monthy by maket captalizaiton. The index's total return consists of price appreciation/depreciatio n plus income as a percentage of the original investment. 50 48 42 26 4 6 2 17 47 29 13 49 21 51 9 3 5 EBRI EBRI EBRI EBRI EBRI EBRI EBRI EBRI EBRI EBRI EBRI EBRI EBRI EBRI EBRI EBRI EBRI Iss Iss Iss Iss Iss Iss Issu u u u u u uIss Iss Iss Iss Iss Iss Iss Iss Iss Iss e B e B e B e B e B e B e B u u u u u u u u u ur r r r r r r e B e B e B e B e B e B e B e B e B e B ief No. ief No. ief No. ief No. ief No. ief No. ief No. r r r r r r r r r rief No. ief No. ief No. ief No. ief No. ief No. ief No. ief No. ief No. ief No. © 2008, Emplo 324 324 324 324 324 324 324 324 324 324 324 324 324 324 324 324 324 • • • • • • • December 2008 December 2008 December 2008 December 2008 December 2008 December 2008 December 2008 • • • • • • • • • • December 2008 December 2008 December 2008 December 2008 December 2008 December 2008 December 2008 December 2008 December 2008 December 2008 yee Benefit Research Institute • • • • • • • www.eb www.eb www.eb www.eb www.eb www.eb www.eb • • • • • • • • • • www.eb www.eb www.eb www.eb www.eb www.eb www.eb www.eb www.eb www.eb ri ri ri ri ri ri ri.o .o .o .o .o .o .org rg rg rg rg rg rg ri ri ri ri ri ri ri ri ri ri.o .o .o .o .o .o .o .o .o .o -rg rg rg rg rg rg rg rg rg rg Educ ation and Research Fund. 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EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org EBRI Issue Brief No. 324 • December 2008 • www.ebri.org 22 14 45 24 37 40 15 23 19 33 38 20 11 12 44 35 41 18 10 43 31 34 36 27 16 28 25 30 32 46 8 7 EBRI Issue Brief No. 324 • December 2008 • www.ebri.org 39 1–10 <$10,000 11–25 $20,000–$30,000 $10,000–$20,000 26–50 >$30,000–$40,000 >$20,000–$30,000 51–100 >$30,000–$40,000 >$40,000–$50,000 101–250 >$40,000–$50,000 >$50,000–$60,000 251–500 >$50,000–$60,000 >$60,000–$70,000 501–1,000 >$60,000–$70,000 >$ >$7 70, 0,0 1,001–2,500 00 00 0–$ –$80 80, ,0 00 00 0 >$80,000–$90,000 2,501–5,000 >$80,000–$90,000 >$90,000–$100,000 5,001–10,000 >$90,000–$100,000 >$100,000–$200,000 >10,000 >$100,000 >$200,000 $20,000–$30,000 All Plans >$30,000–$40,000 >$40,000–$50,000 >$50,000–$60,000 >$60,000–$70,000 >$70,000–$80,000 >$80,000–$90,000 >$90,000–$100,000 >$100,000 Figure 25 Percentage of 401(k) Plan Participants Without Equity Fund Balances Figure 30 Asset Allocation Distribution of Participant Account Balance to Company Stock in 401(k) Plans With Company Stock, by Age Who Have Equity Exposure, by Participant Age or Tenure, 2007 Figure 23 a,b Percentage of Participants Without Equity Funds Asset Allocation Distribution of 401(k) Participant Account Balances to Equity Funds, by Age Percentage of Participants, 2007 Non-lifecycle balanced Combination of company stock Figure A4 a,b Figure 1 Percentage of participants, 2007 Percentage of Account Balance Invested in Company Stock b b Company stock and/or Lifecycle funds as only funds as only equity Company stock as only and/or lifecycle funds, and/or Asset Allocation Distribution of Account Balance: Balanced Funds 401(k) Plan Characteristics, by Number of Plan Participants, 2007 Figure 28 Figure 29 a Figure 21 Age Group Zero 1–10% 11–20% 21–30% 31–40% 41–50% 51–60% 61–70% 71–80% 81–90% 91–100% balanced funds Percentage of Account Balance Invested in Equity Funds equity Investment Figure 35 investment equity investment non-lifecycle balanced funds Among Recently Hired Participants, by Age, in 2006 Figure A3 Asset Allocation Distribution of 401(k) Participant Account Balance to Balanced Funds, by Tenure Asset Allocation Distribution of 401(k) Participant Account Balance to Balanced Funds, by Age Average Asset Allocation of 401(k) Accounts, by Participant Salary and Investment Options 20s 57.2% 10.1% 7.5% 6.0% 4.6% 4.7% 2.6% 1.4% 1.1% 0.7% 4.1% Number of Plan Participants Total Plans Total Participants Total Assets Average Account Balance Age Group Age Group Asset Allocation Distribution of Account Balance to Balanced Funds Among Recently Hired Participants Zero 1–10% 11–20% 21–30% 31–40% 41–50% 51–60% 61–70% 71–80% 81–90% , by Age 91–100% a,b Asset Allocation Distribution of 401(k) Participant Account Balance to Balanced Funds, by Tenure a,b a,b a Percentage of recently hired participants, 2006 Figure A2 30s 46.9% 13.5% 9.4% 7.3% Percentage of Participants, Percentage of Participants, 5.4% 4.8% 2007 2007 3.1% 2.0% 1.5% 1.1% 5.1% 1–10 Percentage of account balances, 2007 a,b 20s 63.2% 32.3% 11,687 65,833 12.2% $3,722,980,332 6.4% $56,552 12.3% 20s 50.4% 1.9% 2.4% 3.4% 3.4% 4.5% 5.2% 4.9% 5.8% 5.3% 12.9% Percentage of Recently Hired Participants, a,b 2007 Asset Allocation Distribution of Account Balance to Balanced Funds, by Age, in 2006 Percentage of Participants, 2006 d 30s 40s 42.9% 11–25 69.9%14.8% 9.7% 34.1% Percentage of Account Balance Invested in Balanced Funds 7.5% 5.6% 11.3%4.8% 3.3% 9.1%2.3% 1.8% 1.4% 15.4% 6.0% 12,903 221,374 $11,633,251,756 $52,550 30s 35.4% 2.5% 2.9% 4.1% 4.4% 5.8% 6.8% 6.7% 7.8% 6.9% 16.7% Equity Lifecycle Non-Lifecycle Bonds Money GICs /Stable Company Percentage of Account Balance Invested in Balanced Funds Percentage of Account Balance Invested in Balanced Funds a,b 40s 67.5% 28.9% Percentage of Account Balance Invested in Balanced Funds 10.6% 12.3% 15.8% b c 50s 41.6% 16.0% 9.3% 7.0% Percentage of Participants, 5.3% 4.5% 2006 3.2% 2.3% 1.9% 1.5% 7.4% 26–50 9,817 356,502 $18,104,579,032 $50,784 40s 32.8% 3.1% 3.2% 4.4% Percentage of Account Balance Invested in Balanced Funds 4.8% 6.3% 7.3% 7.1% 7.9% 6.6% 16.4% Salary Age Funds Funds Balanced Funds Funds Funds Value Funds Stock Tenure (years) Age Group Zero Zero 1–10% 1–10% 11–20% 11–20% 21–30% 21–30% 31–40% 31–40% 41–50% 41–50% 51–60% 51–60% 61–70% 61–70% 71–80% 71–80% 81–90% 81–90% 91–100% 91–100% 50s 65.5% 24.1% 10.0% 16.0% 15.4% Age Group Zero 1–10% 11–20% 21–30% 31–40% 41–50% 51–60% 61–70% 71–80% 81–90% 91–100% d 60s 44.7% 15.0% 7.8% 5.9% 4.3% 3.7% 2.6% 2.0% 1.8% 1.5% 10.8% 50s Group 35.1% 51–100 Zero 4.0% 1–10 3.8% >10–20 7,677 5.0% >20–30 >30–40 5.3% 544,808 >40–50 6.7% $27,311,612,372 >50–60 7.5% >60–706.8% >70–80 $50,131 7.0% >80–90 >90–100 5.1% 13.7% Tenure (years) Plans Without Company Stock, GICs Zero 1–10% 11–20% /Stable Value Funds 21–30% 31–40% 41–50% 51–60% 61–70% 71–80% 81–90% 91–100% 0–2 47.3% 4.5% 5.3% 5.2% 2.8% 2.6% 2.8% 1.6% 1.5% 1.2% 25.3% Percentage of Account Balance Invested in Balanced Funds 20s 50.5% 5.0% 5.5% 4.9% 2.7% 2.5% 2.7% 1.7% 1.6% 1.3% 21.7% 60s 58.4% 17.3% 9.7% 19.9% 11.5% 20s 48.9% 4.2% 5.0% 4.5% 2.5% 2.4% 2.7% 1.8% 1.7% 1.3% 25.0% 0 to 2 All 20s 45.6% 52.4%51.5% 14.2% 5.1% 5.0% 9.0% 5.6% 5.3% 6.9% 4.5% 5.2% 2.3% 5.2% 2.6% 2.2% 4.6% 2.5% 2.1%3.1% 2.2%1.6% 2.1% 1.5% 1.6% 1.6% 1.5% 1.4% 22.4% 1.3% 1.2% 6.4% 20.4% 101–250 6,485 1,027,877 $51,626,730,209 $50,227 60s $20,000–$40,000 42.5% 4.4% 50.3% 4.0% 5.0% 18.4% 5.1% 8.2% 6.0% 13.4% 6.4% 8.1% 5.3% 5.1% 3.6% 12.5% >2–5 50.7% 6.1% 6.4% 6.0% 3.4% 2.9% 2.8% 1.6% 1.5% 1.4% 17.3% Age Group All Zero65.4% 1–10% 11–20% 27.9% 21–30% 31–40% 10.7%41–50% 51–60%12.3%61–70% 71–80% 14.4% 81–90% 91–100% 30s 50.6% 7.2% 6.9% 6.0% 3.4% 2.8% 2.5% 1.5% 1.4% 1.1% 16.6% Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. 30s 52.1% 5.7% 6.3% 5.6% 2.8% 2.5% 2.1% 1.4% 1.4% 1.1% 18.9% >2 to 5 55.9% 6.1% 6.4% 5.7% 3.0% 2.8% 2.3% 1.4% 1.3% 1.1% 13.9% 30s >$40,000–$60,000 45.8% 5.0% 53.7% 5.9% 16.8% 5.6% 3.0% 7.7% 2.7% 12.7% 2.7% 7.0%1.5% 1.4% 1.2% 25.2% 251–500 2,995 1,053,255 $51,763,123,352 $49,146 All 37.5% 3.1% 3.2% 4.4% 4.6% 6.0% 6.8% 6.4% 7.1% 5.9% 14.9% 20s >5–10 53.8% 53.8% 5.5% 7.8% 5.5% 7.2% 4.7% 6.4% 2.5% 3.7% 3.0% 2.3% 2.7% 2.1% 1.5% 1.6% 1.4% 1.4% 1.2% 1.2% 11.5% 19.4% a Tenure (years) The analysis includes the 9.7 million participants in plans with company stock at year-end 2007 40s 40s 53.1% 53.4%7.5% 4.9% 6.9% 5.7% 6.3% 5.5% 3.5% 2.6% 2.6% 2.9% 2.3% 2.5% 1.3% 1.4%1.4% 1.3% 1.1% 1.1% 19.0% 13.5% >5 to 10 59.6% 7.5% 6.9% 6.1% 3.3% 2.7% 2.2% 1.2% 1.1% 0.9% 8.4% >$60,000–$80,000 56.9% 14.9% 7.1% 12.1% 6.7% Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. b 40s 30s >10–20 55.2% 47.2% 57.5% 501–1,000 8.8% 7.3% 4.5% 7.5% 5.4% 6.8% 1,8516.7% 5.8% 5.6% 1,311,306 4.0% 3.0% 2.9% 3.2% 2.5% 2.8% $68,437,552,757 2.6% 2.8% 2.0% 1.4% 1.5% 1.3% $52,190 1.2% 1.4% 1.2% 1.0% 1.1% 0.9% 11.6% 24.8% 8.2% Row percentages may not add up to 100 percent because of rounding 0–2 69.5% 40.4% . 12.1% 4.8% 12.2% >10 to 20 a 50s60.5%52.2% 8.3% 4.5% 7.0% 5.2% 5.5% 6.3% 2.7% 3.7% 2.8%2.9% 2.4% 2.3%1.4% 1.2% 1.5% 1.0% 1.1% 20.7% 0.8% 5.9% 50s >$80,000–$100,000 54.5% 7.3% 59.0% 6.6% 6.1% 14.0% 3.7% 6.2% 3.1% 12.1% 2.7% 6.4% 1.5% 1.3% 1.1% 12.3% The analysis includes the 21.8 million participants in the year-end 2007 EBRI/ICI database. 40s 59.1% 7.3% 6.8% 6.0% 3.3% 2.7% 2.2% 1.2% 1.1% 0.9% 9.4% >20–30 60.0% 1001–2500 8.7% 7.0% 1,4335.9% 2,243,984 3.6% 2.8% $125,321,204,456 2.2% 1.3% $55,848 1.1% 0.9% 6.5% 50s >2–5 46.6% 66.4% 4.2% 5.0%29.2% 5.4% 2.9% 12.6% 2.8% 2.9% 8.7% 1.5% 1.5% 15.8% 1.1% 26.1% b >20 to 30 60s65.1%54.5% 8.0% 3.9% 6.5% 4.4% 4.6% 5.5% 2.3% 3.3% 2.7%2.5% 2.3% 2.0%1.2% 1.1% 1.3% 0.9% 1.0% 21.8% 0.7% 4.4% >$100,000 60.1% 11.4% 6.8% 11.6% 6.7% Row percentages may not add to 100 percent because of rounding. 50s 60.1% 6.9% 6.4% 5.9% 3.5% 2.9% 2.3% 1.3% 1.1% 0.9% 8.7% 60s 60.3% 6.0% 5.3% 5.2% 3.3% 2.8% 2.5% 1.3% 1.2% 1.0% 11.3% >30 >5–10 66.8% 65.4% 7.2% 5.5%22.3% 4.7% 3.1% 11.8% 2.4% 1.9% 12.9% 1.1% 0.9% 18.4% 80.0% 5.5% 2,501–5,000 685 2,389,409 Figure 31 $138,569,623,021 $57,993 60s 49.9% 4.0% 4.2% 4.6% 2.7% 2.7% 2.7% 1.3% 1.3% 1.1% 25.5% >30 All 73.4%52.4% 5.9% 5.1% 4.8% 5.6% 5.2% 4.1% 2.6% 2.6% 2.5%2.0% 2.2% 1.6%1.5% 0.8% 1.5% 0.7% 1.2% 20.4% 0.5% 3.4% All 56.8% 12.1% 7.8% 13.6% 6.9% 60s 65.3% 5.6% 5.1% 5.0% 3.1% 2.7% 2.2% 1.1% 1.0% 0.8% 8.1% a All >10–20 All 53.4% 53.4% 62.8%6.9% 6.9% 6.4% 6.4%17.4%5.9% 5.9% 3.4% 3.4% 10.6% 2.8% 2.8% 2.6% 2.6% 17.6% 1.4% 1.4% 1.3% 1.3% 1.1% 17.1% 1.1% 14.8% 14.8% 5,001–10,000 d 333 2,298,588 $159,421,876,799 $69,356 All 59.1% 6.8% 6.3% 5.6% 3.1% 2.6% 2.1% 1.3% 1.1% 0.9% 10.9% All 47.3% 4.5% More Re 5.3% cently Hire 5.2% d 401(k) P2.8% lan Participa 2.6% nts Hold Ba 2.8%la c nced1.6% Funds 1.5% 1.2% 25.3% Plans With GICs /Stable Value Funds All 59.1% 6.8% 6.3% Percentage of Account Balance Invested in Lifecycle 5.6% 3.1% 2.6% 2.1% Funds 1.3% 1.1% 0.9% 10.9% Figure 24 >20–30 61.0% 11.3% 7.7% 27.6% 14.4% >10,000 366 10,260,144 $769,229,937,257 b b $74,973 Percentage of recently hired participants holding balanced funds, 1998–2007 $20,000–$40,000 44.4% 13.1% 14.3% 6.0% 2.3% b 19.4% Percentage of Account Balance Invested in Lifecycle Funds Percentage of Account Balance Invested in Lifecycle Fundsb >30 56.6% Asse 7.0% t Alloc Percentage of Account Balance Invested in Lifecycle Funds ation Distribution of 5.8% 401(k) Participant 32.7% b 11.0% Age Percentage of Account Balance Invested in Lifecycle Funds Percentage of Account Balance Invested in Lifecycle Funds All 56,232 21,773,080 $1,425,142,471,344 $65,454 >$40,000–$60,000 48.0% 10.8% 15.2% 5.4% 2.4% 16.8% Tenure (years) Age Group Zero Zero 1–10% 1–10% 11–20% 11–20% 21–30% 21–30% 31–40% 31–40% 41–50% 41–50% 51–60% 51–60% 61–70% 61–70% 71–80% 71–80% 81–90% 81–90% 91–100% 91–100% Age Group 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 All 65.4% 27.9% 10.7% 12.3% 14.4% Tenure (years) Group Zero Zero 1–10% 1–10 11–20% >10–20 >20–30 21–30% >30–40 31–40% >40–50 41–50% >50–60 51–60% >60–70 61–70% >70–80 71–80% >80–90 >90–100 81–90% 91–100% Age Group Zero 1–10% Acc11–20% ount Balanc 21–30% es to Equi 31–40% ty Funds, by 41–50% Age, Tenure 51–60% , or Sal61–70% ary 71–80% 81–90% 91–100% Age Group >$60,000–$80,000 Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Zero 1–10% 50.9% 11–20% 21–30% 9.0% 31–40% 15.1% 41–50%5.2% 51–60% 2.4% 61–70% 16.0% 71–80% 81–90% 91–100% 0–2 66.2% 2.3% 2.6% 2.7% 1.5% 1.5% 1.7% 1.1% 1.0% 0.9% 18.4% Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. 0 to 2 20s 20s 70.6% 71.7% 20s 70.6%2.4% 27. 2.0% 0%1.9% 28. 2.5% 3% 2.2% 2.1% 27.1% 2.4% 2.1% 2.3% 27.3% 1.4% 1.2% 1.2% 32.7% 1.3% 1.4% 1.3% 35.1% 1.3% 1.5% 38. 1.3% 9% 1.2% 1.1% 43. 1.0% 5% 1.2% 48. 1.1% 5% 1.1% 1.1% 51.1% 0.9% 16.2% 0.9% 14.8% 15.0% Percentage of participants, 2007 20s 20s 68.3% 73.2% Note: The median account balance at year-end 2007 was $18,942. 2.1% 2.0% 2.4% 2.1% 2.0% 2.3% 1.2% 1.4% 1.2% 1.4% 1.2% 1.7% 1.1% 1.3% 1.0% 1.2% 0.9% 1.0% 17.1% 14.1% a >$80,000–$100,000 54.4% 8.5% 11.5% 5.4% 2.2% 15.5% Components may not add to the total in the first column because of rounding. >2–5 72.7% 3.1% 3.0% 2.8% 1.6% 1.4% 1.4% 0.9% 0.9% 0.9% 11.2% >2 to 5 78.1% 2.6% 2.3% 2.1% 1.3% 1.2% 1.1% 0.8% 0.8% 0.7% 9.0% 30s 71.5% 2.4% 2.6% 2.6% 1.4% 1.3% 1.3% 1.0% 1.0% 0.8% 14.1% 30s 29.0% 31.0% 28.3% 26.5% 33.1% 36.2% 39.8% 42.8% 47.9% 54.2% 30s 71.8% 3.7% 3.2% 2.8% 1.6% 1.4% 1.3% 0.8% 0.8% 0.8% 11.8% b 30s 78.8% 3.1% 2.5% 2.2% 1.2% 1.1% 1.0% 0.7% 0.7% 0.6% 8.2% >$100,000 54.6% 8.3% 11.7% 5.8% 3.0% 13.8% 30s 64.9% 2.6% 3.0% 3.0% 1.6% 1.6% 1.6% 1.0% 1.0% 0.9% 18.7% A lifecycle fund typically rebalances to an increasingly conservative portfolio as the target date of the fund, which is usual Percentage of Account Balanly included in the fund’s name, approaches. ce Invested in Equity Funds >5–10 >5 to 10 77.0% 82.6% 3.9% 3.1% 2.3% 3.1% 2.0% 2.7% 1.2% 1.6% 1.3% 1.0% 1.1% 0.9% 0.6% 0.8% 0.6% 0.8% 0.5% 0.7% 7.0% 5.2% 40s 72.6% 2.0% 2.3% 2.4% 1.2% 1.4% 1.3% 0.9% 1.0% 0.8% 14.2% 40s 30.5% 33.6% 30.8% 27.9% 33.7% 35.7% 39.8% 42.1% 46.6% 52.8% 40s All 81.7% 3.0% 51.6% 2.2% 8.3% 2.0% 1.1% 11.3% 1.0% 5.6% 0.9% 2.9%0.6% 17.4% 0.6% 0.5% 6.4% 40s 75.1% 3.7% 3.1% 2.7% 1.5% 1.3% 1.2% 0.7% 0.7% 0.7% 9.3% Zero 1–20% >20%–80% >80% 40s 65.8% 2.4% 2.7% 2.9% 1.6% 1.6% 1.7% 1.0% 1.0% 0.9% 18.6% >10 to 20 85.4% 3.3% 2.1% 1.8% 1.1% 0.9% 0.7% 0.5% 0.5% 0.4% 3.5% >10–20 50s79.4%71.9% 4.4% 1.8% 3.2% 2.0% 2.2% 2.5% 1.2% 1.5% 1.4%1.2% 1.2% 1.0%0.9% 0.6% 1.0% 0.6% 0.8% 15.5% 0.5% 5.1% 50s 83.2% 2.8% 2.0% 1.8% 1.1% 1.0% 0.8% 0.5% 0.5% 0.5% 5.8% 50s 30.9% 34.9% 32.1% 29.2% 33.9% 35.5% 40.3% 43.3% 47.8% 53.4% Figure 26 Plans With Company Stock 50s 76.8% 3.7% 2.9% 2.4% 1.4% 1.2% 1.1% 0.7% 0.7% 0.6% 8.4% >20 to 30 87.7% All 3.0% 1.8% 37 1.4% .5% 0.9%6.4% 0.8% 35.3% 0.6% 0.4% 20.8% 0.4% 0.3% 2.6% 50s >20–30 60s82.7% 65.1%73.9% 4.0% 2.3% 1.5% 2.8% 2.5% 1.7% 1.7% 2.1% 2.7% 1.0% 1.2% 1.5% 1.3%1.0% 1.6% 1.1% 0.8% 1.7%0.8% 0.5% 0.9% 0.8% 0.5% 1.0% 0.7% 15.6% 0.4% 0.8% 19.9% 3.9% 60s 86.2% 2.2% 1.6% 1.4% 0.9% 0.9% 0.7% 0.4% 0.4% 0.4% 5.0% $20,000–$40,000 40.9% 9.8% Figure 2 5.2% 9.9% 12.5% 19.1% 60s 28.4% 34.9% 33.2% 29.1% 30.2% 30.7% 36.3% 41.6% 45.5% 50.1% Average Asset Allocation for 401(k) Plan Participants Without >30 91.3% 2.1% 1.3% 1.0% 0.6% 0.6% 0.4% 0.3% 0.3% 0.2% 1.9% 60s 80.9% A 2.9% ge Group 2.2% 1.9% 1.2% 1.1% 0.9% 0.6% 0.6% 0.5% 7.2% All 71.7% 2.0% 2.2% 2.3% 1.2% 1.3% 1.3% 1.0% 1.1% 0.9% 15.0% >30 86.0% 3.3% 2.3% 1.7% 1.0% 0.8% 0.6% 0.4% 0.4% 0.3% 3.2% 60s All 67.9% 80.8% 2.2% 2.8% 2.0% 2.1% 1.9% 2.2% 1.3% 1.1% 1.0% 1.4% 0.9% 1.4% 0.7% 0.8% 0.6% 0.9% 0.8% 0.6% 19.0% 7.5% >$40,000–$60,000 43.7% 8.8% 6.3% 10.8% 8.0% 20.3% All 28.9% 31.3% 29.1% 27.4% 33.0% 35.4% 39.3% 42.8% 47.6% 52.7% 401(k) Plan Characteristics, by Plan Assets, 2007 Equity Fund Balances, by Participant Age or Tenure All 80.8% 2.8% 2.1% 1.9% 1.1% 1.0% 0.9% 0.7% 0.6% 0.6% 7.5% 20s 50.4% 4.2% 27.1% 18.2% All 74.9% 3.4% 2.9% 2.5% 1.5% 1.3% 1.2% 0.8% 0.8% 0.7% 10.2% All 74.9% 3.4% 2.9% 2.5% 1.5% 1.3% 1.2% 0.8% 0.8% 0.7% 10.2% Percentage of Account Balance Invested in Non-Lifecycle Balanced Funds All >$60,000–$80,000 66.2% 2.3% 44.4% 2.6% 7.2% 2.7% 1.5% 5.8% 1.5% 10.3% 1.7% 6.7%1.1% 1.0% 23.1% 0.9% 18.4% Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Percentage of Account Balance Invested in Non-Lifecycle Balanced Funds Percentage of account balances, 2007 30s 35.4% 5.4% 35.6% 23.6% a Total Plan Assets Total Plans Total Participants Total Assets Average Account Balance >$80,000–$100,000 46.0% Percentage of Account Balance Invested in Non-Lifecycle Balanced Funds 5.9% 6.2% 9.9% 6.3% 22.9% The analysis includes participants with two or fewer years of tenure in the year indicated. b Age Percentage of Account Balance Invested in Non-Lifecycle Balanced Funds Percentage of Account Balance Invested in Non-Lifecycle Balanced Funds Age Group Zero 40s 1–10% 11–20% 21–30% 32.8% 31–40% 6.3GI % Cs41–50% /Stable 37.8% 51–60% 61–70% 23.1% 71–80% 81–90% 91–100% Lifecycle Non-Lifecycle Bond Money Company Percentage of Account Balance Invested in Non-Lifecycle Balanced Funds >$100,000 $0–$250,000 48.0% 10,356 5.6% 110,228 7.6% $1,011,144,491 9.5% 5.5% $9,173 19.6% a c Tenure (years) Zero 1–10% 11–20% 21–30% 31–40% 41–50% 51–60% 61–70% 71–80% 81–90% 91–100% Group Zero 1–10 >10–20 >20–30 >30–40 >40–50 >50–60 >60–70 >70–80 >80–90 >90–100 Tenure (years) Age Group Zero Funds Zero 1–10% 50s 1–10% 11–20% 11–20% 21–30% 21–30% 35.1% 31–40% 31–40% 7.8%41–50% 41–50% 38.3% 51–60% 51–60% 61–70% 61–70% 18.8% 71–80% 71–80% 81–90% 81–90% To 91–100% ta91–100% l 20s 78.3% Balanced F 4.3% unds 4.1% Funds 3.0% Funds 1.4% Value F 1.1% unds 0.9% Stock 0.5% Other 0.4% Unknown 0.3% 5.6% Age Group Zero 1–10% 11–20% 21–30% 31–40% 41–50% 51–60% 61–70% 71–80% 81–90% 91–100% All 44.9% 5.9% Fig 5.7% ure 32 12.8% 7.5% 20.5% 0 to 2 77.8% >$250,000–$625,000 3.9% 4.2% 8,5603.3% 165,543 1.3% 1.2% $3,647,145,469 0.9% 0.5% $22,031 0.4% 0.3% 6.0% 20s 77.5% 4.0% 4.0% 2.9% 1.2% 1.0% 0.9% 0.5% 0.4% 0.3% 7.3% 60s 42.5% 8.4% 32.9% 16.1% 30s 0–2 76.9% 78.3% 5.5% 3.6% 5.0% 3.8% 3.8% 3.1% 1.3% 1.8% 1.1% 1.4% 1.0% 1.1% 0.5% 0.5% 0.4% 0.4% 0.3% 0.3% 6.6% 3.4% Age Group 20s 77.3% 4.1% 3.9% d 3.0% 1.3% 1.1% 1.2% 0.5% 0.5% 0.3% 6.7% 20s >2 to 5 Plans With Company Stock and GICs 78.2% 75.9% 3.5% 4.7% 3.5% 4.8% /Stable Value Funds 3.8% 2.6% 1.8% 1.1% 1.5% 1.0% 1.0% 1.1% 0.6% 0.5% 0.5% 0.5% 0.3% 0.3% 4.6% 7.7% 30s 77.5% 4.4% Many Re4.6% cently Hir 3.4% ed 401(k 1.4% ) Plan Pa1.1% rticipants 0.9% Hold Life 0.4% cycle Funds 0.4% 0.3% 5.5% >$625,000–$1,250,000 8,690 264,362 $7,889,030,112 $29,842 40s 76.2% 5.4% 5.0% 4.2% 2.1% 1.6% 1.2% 0.6% 0.5% 0.3% 0.0% 20s 37.8% Tenure ( 17. y7% ears) 5.2% 8.9% 12.3% 9.9% 1.3% 7.0% 100.0% >2–5 74.5% 4.9% 4.8% 3.9% 1.8% 1.4% 1.3% 0.6% 0.6% 0.4% 5.7% 30s 75.3% 5.7% 5.0% 3.8% 1.8% 1.3% 1.2% 0.5% 0.5% 0.3% 4.6% >5 to 10 $20,000–$40,000 75.4% 5.5% 40.3% 5.0% 5.7% 4.2% 2.1% 7.2% 1.6% 5.0% 1.3% 2.1%0.6% 16.1% 0.5% 21.7% 0.4% 3.1% 40s 78.7% 3.6% 4.2% 3.6% 1.4% 1.2% 1.0% 0.4% 0.4% 0.3% 5.3% 30s 77.8% 4.1% Perce 4.2% ntage of 3.2% recently hi 1.3% red particip 1.1% ants, 20061.0% and 2007 0.4% 0.4% 0.3% 6.2% >$1,250,000–$2,500,000 8,496 427,119 $15,182,796,960 $35,547 50s30s 36. 76.1% 5% 5.1% 16.1% 4.8% 6.8% 4.3% 9.1%2.3% 12.1.8% 8% 14. 1.4% 0% 0.7% 3.0% 0.5% 1.7% 0.4% 100.0%2.7% 0–2 48.4% 3.5% 28.0% 20.1% >5–10 73.3% 6.1% 5.4% 4.3% 2.2% 1.6% 1.4% 0.7% 0.6% 0.4% 4.2% >10 to 20 74.1% 6.1% 5.2% 4.6% 2.5% 1.9% 1.5% 0.7% 0.5% 0.4% 2.1% >$40,000–$60,000 39.3% 5.2% 7.0% 4.6% 2.1% 14.6% 25.6% 40s 50s 74.6% 78.6%5.8% 3.2% 5.1% 3.9% 4.2% 3.7% 2.1% 1.5% 1.4% 1.5% 1.1% 1.3% 0.5% 0.6%0.4% 0.5% 0.3% 0.4% 5.4% 3.9% 40s 27.3% 14.6% 7.9% 9.5% 17.2% 18.3% 3.8% 1.4% 100.0% a 60s 79.1% >$2,500,000–$6,250,000 4.0% 3.7% 8,5683.6% 870,658 2.1% 1.7% $33,975,265,229 1.4% 0.6% $39,023 0.5% 0.4% 2.8% 40s 78.6% >2–5 3.5% 3.9% 40 3.4% .7% 1.4%4.8% 1.1% 33.8% 1.1% 0.4% 20.6% 0.4% 0.2% 6.0% >10–20 72.2% 6.8% Holding B 5.6% alanced Funds 4.7% Holding Lif 2.5% ecycle 1.9% Funds Ho 1.5% lding Non-Lif 0.7% ecycle Balanc 0.6% ed Funds 0.4% 3.0% >20 to 30 >$60,000–$80,000 76.4% 5.9% 41.2% 4.9% 6.0% 4.0% 2.3% 8.1% 1.7% 4.6% 1.3% 2.0%0.7% 14.0% 0.5% 22.1% 0.4% 1.6% 50s 60s 20.2%80.2% 12. 2.6% 9% 3.2%9.3% 3.2% 10.1.4% 4% 1.4% 24.3% 1.1% 18.3% 0.4% 0.4% 3.6% 0.3%1.1% 5.8% 100.0% 50s 74.2% 5.6% 5.0% 4.3% 2.3% 1.7% 1.5% 0.7% 0.6% 0.4% 3.7% All 76.9% 5.1% 4.7% 3.9% 1.9% 1.5% 1.2% 0.6% 0.5% 0.3% 3.3% >5–10 31.9% 6.7% 38.6% 22.8% >$6,250,000–$12,500,000 4,232 880,036 $37,227,110,442 $42,302 >20–30 50s 74.1% 78.8% 6.8% 3.2% 5.3% 3.6% 4.3% 3.4% 2.4% 1.5% 1.7% 1.2% 1.3% 1.2% 0.7% 0.5% 0.5% 0.4% 0.4% 0.3% 2.4% 5.9% Age Group 2006 2007 2006 2007 2006 2007 >30 >$80,000–$100,000 81.6% 4.4% 43.2% 3.6% 5.8% 3.1% 1.9% 8.7% 1.4% 4.9% 1.1% 1.9%0.5% 12.5% 0.4% 20.6% 0.3% 1.4% 60s 13.5% 10.3% 12.0% 12.0% 33.8% 14.4% 3.2% 0.8% 100.0% All 78.1% 3.9% 4.2% 3.3% 1.3% 1.2% 0.9% 0.5% 0.4% 0.3% 6.0% Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Report. >10–20 27.7% 8.3% 41.1% 22.8% 60sd 76.8% 4.5% 4.0% 3.8% 2.2% 1.7% 1.5% 0.7% 0.5% 0.4% 3.8% >$12,500,000–$25,000,000 2,843 1,153,906 $49,664,974,228 $43,041 >30 78.1% 5.6% 4.2% 3.5% 2.1% 1.5% 1.2% 0.6% 0.5% 0.4% 2.2% All 76.9% 5.1% 4.7% 3.9% 1.9% 1.5% 1.2% 0.6% 0.5% 0.3% 3.3% 60sAll >$100,000 79.7% 20s 2.9% 48.44.7% 5% 3.1% 51.5.9% 1% 3.0% 29 1.4% .4% 7.9% 1.3% 31.7%5.2% 1.3% 22.5% 1.9%0.4% 12.0% 21. 0.4% 8% 19.4% 0.3% 6.2% a 21.4% 12.8% 9.5% 10.5% 24.5% 16.5% 3.5% 1.2% 100.0% The analysis includes the 20.0 million participants in the year-end 2006 EBRI/ICI database. Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. >20–30 31.3% 10.0% 40.5% 18.1% >$25,000,000–$62,500,000 2,110 1,870,386 $82,590,853,141 $44,157 Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Report. AllAll All 75.3% 75.3% 5.4% 5.4% 42.9% 4.8% 4.8% 3.9% 4.9% 3.9% 2.0% 2.0% 7.1% 1.5% 1.5% 5.0% 1.3% 1.3% 2.0% 0.6% 0.6% 16.6% 0.5% 0.5% 0.4% 18.9% 0.4% 4.4% 4.4% a b 30s 47.9% 54.2% 28.5% 35.1% 22.5% 22.2% Tenure (years) All The analysis includes the 2.8 million recently hired participants (those with two or fewer years of tenure) in 2006. 78.3% 3.6% 3.8% 3.1% 1.3% 1.1% 1.1% 0.5% 0.4% 0.3% 6.6% Row percentages may not add up to 100 percent because of rounding. >30 41.4% 10.4% 34.5% 13.7% a The analysis includes the 20.0 million participants in the year-end 2006 EBRI/ICI database. Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. b >$62,500,000–$125,000,000 960 1,732,917 $83,542,126,851 $48,209 c 0–2 48.1% 14.3% 6.4% 9.3% 12.2% 6.2% 1.1% 2.5% 100.0% Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Row percentages may not add to 100 percent because of rounding. 40s 46.6% 52.8% 27.4% 34.2% 21.3% 21.4% A lifecycle fund typically rebalances to an increasingly conservative portfolio as the target date of the fund, which is usually included in the fund’s name, approaches. a b a a Salary Row percentages may not add up to 100 percent because of rounding. The analysis includes the 21.8 million 401(k) plan participants in the year-end 2007 EBRI/ICI database. The analysis includes the 21.8 million 401(k) plan participants in the year-end 2007 EBRI/ICI database. Minor investment options are not shown; therefore, row percentages will not add to 100 percent. Percentages are dollar-weighed c averages. a 2–5 37.3% 16.4% 8.6% 10.6% 14.3% 9.2% 1.9% 1.6% 100.0% >$125,000,000–$250,000,000 602 1,894,565 $106,633,087,818 $56,284 The analysis includes the 3.8 million recently hired participants (those with two or fewer years of tenure) in 2007 A lifecycle fund typically rebalances to an increasingly conservative portfolio as the target date of the fund, which is usually included in the fund’s name, 50s 47.8% 53.4% 28.1% 34.9% 21.4% 21.2% b c Note: "Funds" include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment product b b $20,000–$40,000 43.4% 7.5% primarily invested in the security indicated. 32.6% 16.5% A lifecycle fund typically rebalances to an increasingly conservative portfolio as the target date of the fund, which is usual Row percentages may not add up–100 percent because of rounding. Row percentages may not add up to 100 percent because of rounding. 5–10 Salary information is available for a subset of participants in the EBRI/ICI database. 29.1% 16.3% 8.9% 11.3% 16.4% ly included in the fund’s name, approaches. 13.7% 2.7% 1.4% 100.0% b approaches. Row percentages may not add up to 100 percent because of rounding. >$250,000,000 815 12,403,360 $1,003,778,936,603 $80,928 c c b 60s >$40,000– 45. $60,0 5% 00 50.1% 32.6% 26.1% 9.3% 32.1% 40.0% 19.8% 18.2% 20.3% 10–20 22.7% 13.6% 9.0% 10.6% 21.4% 17.3% 4.3% 1.3% 100.0% A lifecycle fund typically rebalances–an increasingly conservative portfolio as the target date of the fund, which is usually A lifecycle fund typically rebalances to an increasingly conservative portfolio as the target date of the fund, which is usual A lifecycle fund typically rebalances to an increasingly conservative portfolio as the target date of the fund, which is usual Note: “Funds” include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment product ly included in the fund’s name, approaches. included in the fund’s name, approaches. ly included in the fund’s name, approaches. primarily invested in the c Note: "Funds" include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment product primarily invested in the security indicated. A lifecycle fund typically rebalances to an increasingly conservative portfolio as the target date of the fund, which is usually included in the fund’s name, approaches. All 56,232 21,773,080 $1,425,142,471,344 $65,454 d >$60,000–$80,000 26.4% 9.2% 43.9% 20.5% 20–30 security indicated. 15.4%All 12.2% 47.6% 9.0% 52.7% 9.4% 28.3% 28.5% 33.8% 20.5%21.9% 4.1% 21.7% 1.0% 100.0% Note: “Funds” include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment produc Note: “Funds” include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment product GICs are guaranteed investment contracts. primarily invested in the security indicated. t primarily invested in the security indicated Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. >$80,000–$100,000 22.0% 9.0% 46.8% 22.2% >30 9.7% Source: Tabulation 9.4% s from EBRI/ICI Pa 9. rt6% icipant-Directed R 12. eti3% rement Plan Da 35. ta C 8% ollection Projec 18. t. 9% 3.6% 0.8% 100.0% d Note: The median account balance at year-end 2007 was $18,942. a All >$100,000 21.3% 9.2% 46.8% 22.6% 21.4% 12.8% 9.5% 10.5% 24.5% 16.5% 3.5% 1.2% 100.0% A lifecycle fund typically rebalances to an increasingly conservative portfolio as the target date of the fund, which is usually Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. included in the fund's name, approaches. a A lifecycle fund typically rebalances to an increasingly conserv Note: Row percentages m ative por ay not add tfolio as the target date of the fund, which is usual to 100 percent because of rounding. ly included in the fund’s name, approaches. Note: The analysis includes the 3.8 million recently hired participants (those with two or fewer years of tenure) in 2007 and the b GICs are guaranteed investment contracts. 2.8 million recently hired participants in 2006. c Row percentages may not add up to 100 percent because of rounding. Percentages are dollar-weighted averages. d The analysis includes the 8.1 million participants with no equity funds at year-end 2007.

Volume 324

Pages 52

EBRI Issue Brief

Jack VanDerhei

Sarah Holden

Luis Alonso

Craig Copeland

Retirement