American workers who held 401(k) accounts consistently from 2003 through 2008 suffered a 24.3 percent average drop in their account balance during 2008’s bear market, according to a report released today by the Employee Benefit Research Institute (EBRI) and the Investment Company Institute (ICI). These consistent participants saw their average account balances increase at an annual rate of 7.2 percent over five years, even after the 2008 losses, according to the study. The account balances include ongoing worker contributions, employer contributions, and investment gains and losses. <A href="http://www.ebri.org/pdf/PR.853_06Oct09.K-Update.pdf">Press release </A>

Because 401(k) balances can fluctuate with market returns from year to year, meaningful analysis of 401(k) plans must examine how participants’ accounts have performed over the long term. Looking at consistent participants in the EBRI/ICI 401(k) database over the five-year period from 2003 to 2008 (which included one of the worst bear markets for stocks since the Great Depression), the study found:

• After rising in 2003 and for the next four consecutive years, the average 401(k) retirement account fell 24.3 percent in 2008.
• The average 401(k) account balance moved up and down with stock market performance, but over the entire five-year time period increased at an average annual growth rate of 7.2 percent, attaining $86,513 at year-end 2008.
• The median (mid-point) 401(k) account balance increased at an average annual growth rate of 11.4 percent over the 2003–2008 period to $43,700 at year-end 2008.

THE BULK OF 401(K) ASSETS CONTINUED TO BE INVESTED IN STOCKS. On average, at year-end 2008, 56 percent of 401(k) participants’ assets were invested in equity securities through equity funds, the equity portion of balanced funds, and company stock. Forty-one percent was in fixed-income securities such as stable-value investments and bond and money market funds.

THREE-QUARTERS OF 401(K) PLANS INCLUDED LIFECYCLE FUNDS IN THEIR INVESTMENT LINEUP AT YEAR-END 2008. At year-end 2008, nearly 7 percent of the assets in the EBRI/ICI 401(k) database were invested in lifecycle funds and 31 percent 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 USE 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 2008, 36 percent of the account balances of recently hired participants in their 20s were invested in balanced funds, compared with 28 percent in 2007, and about 7 percent in 1998. At year-end 2008, almost 23 percent of the account balances of recently hired participants in their 20s were invested in lifecycle funds, compared with almost 19 percent at year-end 2007.

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 nearly 1 percentage point (to 9.7 percent) in 2008. 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 2008, 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 2007 and year-end 2006. Loans outstanding amounted to 16 percent of the remaining account balance, on average, at year-end 2008; this is similar to the year-end 2002 level.

Figure 47 Percentage of Eligible P Figure 30 articipants With 401(k) Loans, Figure 21 Figure 40 ________. ________. “40 Figure 35, Many Recently Hired 401(k) Pl Private Pension Plan Bulletin Histo 1(k) Plan Asset Allocation, Account an Participants Hol rical Tables Balances, and Loan Activity in 2003.” . Washington, DC: U.S. Department d Lifecycle Funds ................................................... Investment Company I of Labor, Employee Benefits nstitute .................. 38 Investment Options acco Average Loan In a given All told Jack Van Distribution of Partic Appendix Figures Year-End 2008 Changes in 401(k) Participants’ Account Balanc in both years, the percentages References other stable- unt balanc , from year-end 1999 t D age erh value funds ees in lifecycle funds to group, longer tenure tends to i is director Bala Snapshot of Asset Allocation to Equities Varied Widely Among Participants as a nces on fh researc investment o ipants’ Ba of participan rough year-en 24 per h at 401(k) tts ho ptio h clanced d 2008, the av ent o mean that e Employee nlding either all o , in addition to f recently hire Participants’ A Fund Allocations by Age a hi Be erage gher nefit the “base” options. Altern d participants in their 60s with rpercentag no account Resear ne o es ccount Balances fch Institut their acco balance among e of participants will have account balances unt ba e (EBRI). the group of consistent participants atively, 17 percent of participants lances in an Sarah that concentration. In addit Hy p olden articular investmen is senior greater ion, t By Participant Age, Tenure, Account Size, or Salary, Selected Years Figure 10 401(k) Plan Asset Allocation, Account Balances, and Loan Average Asset Allocation ofFigure A6 401(k) Accounts, by Participant Age Figure 12 Figure 43 Figure A1 Figure 14 5 Factors That Affect 401(k) Part 30 icipants’ Account Balances Figure 45 Figure 18 Perspective. Security Admin Vol. 10, no. 2, and istration (February 2008b). Av EBRI Issue Brief ailable at , no. 272 (A Figure 20 ugust 2004a). Available at www.ici.org/pdf/per10-02.pdf and Recently Hired 401(k) Plan Participan 40 Figure A3 Figure 6 ts Are Less Likely to Hold Company Stock U.S. Government Accountabilit reports that 19.6 percent of participants made asset transfe percent of plan The Investme Approximately 1.9 percent of the participan s in 2005, and nt Company Institute (ICI) is 10.5 percent of plans in 2004. y Office (1997) finds that mor the national ass ts in the database were missing a birth date r Ei e than 95 8s in their account balances ociation of U.S. invest ghty-four percent of plans percent of 401(k) plans that offer l ment companies, including mutual f du with ring 2008, “u entry, were younger than age automatic enrollment in 2008 p only marginal oans had at least one uly” nds, 20 or director of retirement and in Asset allocation distribution of 401(k) participant account balance vestor research at the Investment Company Institute. Luis Alonso is director of information option were li at year-end 20 grew 56.0 percent, rising from $67,142 at were in plans t than $100,000. tt08, 36 percent h le changed (Figure 20, lower panel). For example, at offer company stock, about 8 percen of the account balances of recently but yeno t of participants ar-end 1999 to $104,734 at y stable- For exa value pro in their 60s w mple, at year ducts, hired part while the re ear-end 2008 ( - ith 10 or fewer years of tenur icipants in their 20s were inve end 2007, 37.2 maining 29 percent of Figures A8 and percent of the participants were e had account A10). This translates sted in balance se participants held d Investment options are grouped into eight broad categories. Distribution of 401(k) Account Balances, by Size of Account Balance Percentage of acco Equity fund unt balance s consist of poole s, 2008 d investments primarily invested in Figu This year re 36, Recen ’s update of the EBRI/ICI 401(k) database introduc tly Hired Participan ts Now 1999–2008 Hold1996 2000 High Consistent Group Was Older Than er Conced entration a new consistent group of partic s2002 in Balanced Fu2005 nds........................................ 2007 ipants, or longitudinal sample. 2008 ...........39 Tenure Composition of Selected 401(k) Account Balance Categories Percentage of 401(k) Plans Offering Loans, by Plan Size, 2008 401(k) Account Balances Less Than $10,000, by Participant Age and Tenure Age Distribution of 2003–2008 Consistent Group Activity in 2008 www.ebr www.dol.g i.org ov/e /pdf/briefspdf/0804ib1.pdf bsa/pdf/privatepensio Loan Balances as a Percentage of 401(k) Account Balances nplanbul letinhistoricalta Figure 49 bles.pdf Ratio of 401(k) Account Balance to Salary for Participants in Their 20s, by Tenure a b Figure 1, 401(k) Plan Characte Barclays Capital U.S. Aggregate Bond Index. Average Account Balances Among 401(k) Participants Present From ristics, by Number of Plan Asset Allocation of San Francisco, Figure 4 Particip CA: Barclays Global In ants, 401(k) Participants 2008 .................................................... vestors. ..................... 7 In any technolo given gy an year, the chang d reseaDistribution of 401(k) Account Balances, by Size of Account Balance rch dat e in a participa abases at EBR nt’ I. Sp s account ba ecial than lance is the sum of three fact ks to Elisabeth Buser of EBors: RI, and Steven Bass, ICI, who Among participants with outstanding 401(k) As a cross-section, or snapshot, of the enti Individual 401( Percenta k) participants’ asset allocati ge of recently hired particip re population of 401(k) plan part on to balanced f loants offered a ans at the en Figure 3 unds v d of 2008, the nd holdi aries widely aro ng comp average u icipants any stock by partici und a , the database includes npaid n average of 15 balance was $ pant age,1 percent (Figure 20, 7,191, compar 401(k) participant 998–2008 ed with s clo from 2007 (although, they te plan participant with applied automatic enrollment older than 69. They were not sed-end funds, exchange- an outstanding loan. tnded to move raded fu only to new included in this analysis. nds ( hires, while 16 percent applied a E larger portions of their account balances TFs), and unit investment trusts (UITs). ICI s utomatic enro ). Fidllment to elity Investmen eeks to enco all no urage adhere nparticipants. ts (2008) repor nce t to s that high to equities, by age, percentage of participants, 2008 funds, compar into an ann balances in exc offered both company stock a no equity fun ual ded with 28 percent in 2007, 2 s. average growth rate of ess of $100,00 At year -end 2008, 35.0 percent continued to n 0 in 2008 (Figu d stable-value 5.1 percent over the nine-year peri 4 percent in 20 re 15). Howeve products, in addition to the b 06, r, abou 19 percent hold no equity funds, but 2 t 39 percent of participants in their 60 od. The in 2005, and ase options. median account bala about 7 percent among that ag .2 percent of participants were nce (or midpoint, with s with between 20 e group Percentage of participants with account balances in specified ranges,* 2008 Non-lifecycle sto This appe cks; these funds include e ndix includes additional information on the new 20 All Participants in EBRI/ICI 401(k) Database at Year-End 2008 quity mutual f Percentage of participants by age, year-end 2003 and year-end 2008 unds, bank collecti 03–2008 consis ve trusts, life insurance sep tent group (Figures A1–A5, which were discussed arate accounts, and other pooled All Percentage of participants with account balances in specified ranges, 2008 18% 18% 17% 19% 18% 18% Definition of 401(k) Account Balance Percentage of participants with account balances less than $10,000 at year-end 2008 a b Loan Balances as a Percentage of 401(k) Account Balances for Participants With 401(k) Plan Loans, by Plan Size, 2008 Figure 37, Many Recently Hired Participants Now Hold High Percentage, 2008 Figure 9 Concentrations in Lifecycle Funds .............................................40 helped prepare the figures. This Issue Brief was written with assistance from the Institute’s research and editorial By Jack VanDerhei, EBRI; Year-End 2003 Through Year-End 2008, Sarah Hol More Than One-Third of 401(k) Participants den, ICI; an d Luis Alonso, EBRI by Participant Age and Tenure who are young $7,495 in the y top panel). For Age Group example, 49 percent of partic and individu ear-end 2007 d 49 als who are new 1998 atabase (Figure 48). The me 1999 2000 2001 to their jobs, a ipants held nodian sbalanced fu well2002 2003 2004 loan balan as older ndsc participants and those who ha ,e outstanding while 20 b 41 percent of participants held more than 2005 2006 2007 was $3,889 at year-end 2008, ve been with t 2008 h eir overall on ethical standar ly 6.6 percen ds, promote public understand t of participants in their recordkeeping system made EBRI/ICI 401(k) ing, and otherwise ad Database Represents Figure 8 vance th ex e interests of changes dur funds, their shareholders, directors, ing September, October, and 93% Figure 2, 401(k) Plan Characte 53 17 31 100% ristics, by Plan Assets, 2008.................................................................................................. 7 ________. “Ap in 1998 (Figure 39). ________. and 30 half above a holding equity years o Priv nd half below) among this consistent group pendix: Additional Figures for funds fate Pension Pla tenure with t at year-e At year-end 2008, amon Percentage of participants with account balances in specified ranges, 2008 Percentage of participants, by age, year-end 1999 and year-end 2008 hnd 2008 whe n eir current em Bulletin, Abstra n ployer had account Percentage of Account Balance Invested in Equities th they had g recently hired participants e EBRI/ICI Participant-Directed Retire ct of 2006 Form 5500 Ann held also grew, rising none at year-e balances GI132.5 percen u greater than $ C nd 2007. in their 20s, lifecycle funds acc a sl Reports. /Stable- Conversely, the ass ment Plan Dat Was t f 100,000. The p rom $25,292 in 1999 to $58,797 in hington, DC: U.S. Department of a Collection Project f ercentage increases to et allocati ounted for 63 on to equity oper- r investments. Si Age Group milarly, Equitybond funds Lifecycle are any Balanced pooled account Bond primarily invested in bonds. Money Com Balanced fu pany nds are pooled accounts Bloomberg Data in conjunction with the main r . New York, Neport). Fo Y: Bloomberg L r completeness, it also contains all of .P. the usual annual updates for the older 1999– The percenta Approximately 7.9 percent of the participan Because of these changes in the cross-secti 70% ge of 401(k) participants with 401(k) loans outs ts in the database were missing a date ons, comparing average accou tanding acrosn s all participants t balances acr 90% of hireo entry and ss different ye both with an were no d without 401(k) ar-end cross- t included in b b 6% staffs. Any views expressed in this report are those of the authors, and should not be ascribed to the officers, trustees, In any • Ne given w contr year, the EBRI/I ibutions by th CI 401(k) database provides for Participants With Loans, by Participant Age, Tenure, e participant or the employa er or snaps both; hot of the 401(k) account balances across all active October 2009 • No. 335 4% Figure A8 88% 88% Age Group 45.6% Tenure (years) 401(k) Plan Assets Concentrated in Equity Funds a Snapshot of Year-End Account Balances 2%2003 2004 2005 2006 2007 2008 c 20s 45.6% 60.8% 61.1% 60.5% 58.1% 53.9% 49.6% 49.8% 45.4% 40.0% 35.4% 32.9% current employers for many y 80 percent of their accounts in balanced compared with $4,167 in the Lifecycle funds were available in three-quarte year-end 2007 ears. These a Are in Their 20s or 30s or Have Short Job Tenure fun nds in 2008 (Figure 31) nual upd database. With account rs of 401(k) pl ates of the Figure 5 Age Group ans in the ye datab . At yea balan ase ar-end 2008 d r-end 2008, 51 provide snapsh ces generally p ata percent of 401 ots of 401(k) account balances, asset u base (Figure 22), up from 67 per- lled down by the stock marke (k) participants held t, the November, 2009, a time of stock market vola and ad Figure 38, Asset Allocati Year-End 2003.” Labor, Employee Benefits Sec visers. Members of IC Investment C on Distribution of Acc I manage total uo rity Admi mpany Institute Perspective. Wide Cross-Section of 401(k) Universe Domestic Stock and Bond Market Indexes assets of nistration, December 2008c. Available at tility. An ICI survey of recordkeepers co ount Balance to $11.2 trillion and se Balanced Funds Among Recently Hired Par Vol. 10, no. 2A 86% rve over 93 million shareholders. (August 2004b vering more than 2 ). Available at 2 million DC plan ticipants, by Age.....41 Age Group20s 12% Age Group Funds Funds Zero Funds 1–20% Funds >20–40% Age Group11% Funds>40–60%10% Value Funds >60–80%11% Stock >80–100%10% Other Unknown10% Total funds ch 45 percent for participants in their 60s with more than 30 y 2008 (an a cent of their balanced fund anged nnual average gro for 3.6 percent of 401(k) participants from h as w sets, or almost th rate of 9.8 percent; Figure A8). 23 percent of thei ears of tenure. oldin r account ba g equity funds at lances overall. The year-end 2007 to holding none at y increase in asset allocatio ear-end n to invested in both stocks and b 2008 consistent group of participants (Figures A3 and A onds. They are classified into two subcategor 6–A 84% Figure 16 12). In addition, changes in a ies: lifecycle funds asset allocation and non-lifecycle balanced for a consistent group 17% this analysis. plan loan acces Figure 3, EBRI/ or other sectional snapshots can lead t sponso ICI 401(k) Database Represe s was similar in earlier years. For example, rs of EBRI, Eo B false conclusions. For exam RI-ERF, or $4,579 their staffs. Neit nts Wide Cross-Sectio $8,286Figure 39 in 2007, this m pl he e, newly formed plans would te ar EB $12,335 n of 401(k) RI nor easure was 16 EBRI-ER Universe $17,568 F lo............................................ bbies or takes percent, and in $22,851 nd to pull down the aver positions on specific 2006, 15 perc $18,598 ............ age ent. 8 20s53% 401(k) plan average asset allocation, percentage of total assets, All selected years participants’ accounts. The database contai Account Size, or Salary, Selected Years ns only the account balances 46 held in 48 the 401(k) plans at participants’ current Figure 25 a 90% 401(k) plan participant account balances,* 1996–2008 www.d www.ici30s o.l.g org/pd30s 20% ov/eb f/per10-02_appendix.pdf sa/pdf/2006p 12%61.9% ensionplanbulle 62.3% 61.6% 60.0% tin.pdf 19% 57.2% 53.18% 3% 52.3% 20% 47.6% 43.6% 40.4% 20% 20% 37.4% allocation, and loan activity across wide cr balanced fu ratio of the loa cent of plans in Brady, Peter. nds “Measuring Reti n , the year-end 2 compared with 47 percent of outstanding trement Reso 401(k) Account Balances o007 EBRI/ICI 401(k) database the remainin urce Adequacy. oss g account bala participants at year-end 2007 -sections of pa ” nce edged up i Jrticipan o.urnal o Among 401(k) Participants These plans o ts. Ho f Pens w nio e 2008, althou .n Eco ver, th At year-end 2 ffered lifecycle f ne cross-sectional analysis is not well- omics and Finance gh within rang 008, balanced f unds to 17.4 . (Published online by es seen in othe million, or 72 per- und use by r years suited 20s 11.5% 2.9% 20s 4.2% Figure 23 30s 14% a40s 7.4% 50s 60s 21.0% b 53.0% participant accounts finds tha 20s 38.0% 15. t401(k) Account Balances 14.4 percent of DC plan part 3% 12.7% 20s 79% 9. 30s 3% icipan 40s 5. Among 401(k) Participants 5% ts changed the asset all 50s 60s8.4% 7. o8% cation of their 1.3% account balances in 1.3% 100% Where the world turns for the facts on U.S. employee benefits. 2008. On net, the percentage 6 balanced funds occurred in bo >2-5th the lifecycle fund a of participants holding no equity $1,594 n $5,634 d non-lifecycl funds $10,315 e fund ca edged up only slightly from 37.2 pe tego $15,999 ries: lifecycle fund assets $21,825 rcent to 38.6 percent acco $17,909 unted for funds policy . A lifecyc proposa 60% lle fund p s. EBRI iun rsues vites comment on a long-term investment strat this research. egy, using a mix of asset classes, or asset allocation, that the fund of participants with accounts at year-end 20 Figure 39, Average Asset Allocation of 401(k) • Total investment return on Median Account Balance account balan 07 and Accounts by P ces, whic year-enh d 2008 are pre ade rticipant Age and Investment Options Among Participants pen Among Long-Tenured ds on the sented in Figur performance es A13 and of financia A1l mar 4. kets and on t he acco This upd unt balanc ate ee, xtends previous findings from but wo Average Asset Allocation of 401(k) Accounts by Participant Age uld tell us nothing ab the projec out consistently t for 1996 through participating workers. Simila 2007. For year-e rly, nd 2007 res the aggreg ults, see Holden, ate average account employers and Intr 32 54280 oducti40s 22% on reflects the entrance of new p 47 lans and new p21% articipants and 20% the exit of participan22% 22% ts who retire or change jobs. b22% Cambridge University Press on Septembe 49% Average Asset Allocation of 401(k) Accounts, r 8, 2008, doi:10.1017/S1474747208003806.) Available at Figure 4, More Than One-Thir 40s a Percentage of 401(k) plan participants by age or tenure, 2008 59.8% d of 401(k) Par 401(k) plan characteristics by number of participants: 60.6% 74% 1996 t59.5% icipants Are in Their 20s 58.8% 2000 55.9% 2002 or 30s or Have 52.6% 52.0% 2005Sho 47.3% rt Job 2007 Tenure 43.6% .......................... 40.7% 200837.9% ...... 9 b to addressing the question of of analysis. Si participants was about evenly Among the 199 cent, of the participants. The positive correlation betw In plan-year 2 30s Average Asset Allocation of Accounts, by Participant Age and Investment Options milar to year-e 9–2008 consistent group, there was a wide range of 30s 006 (the latest data availa 47.0% >5–10 Among participants offered lifecycle funds, 42 perc nd 2002, loan 9. the impact split between 1% een tenure 10.3% $4,776 of participation in 8.ble), only 1.6 percent of the $2.8 t balances as a and 8% lifecycle funds 4.2% account balance is expected because $8,491 10.3% p5.4% ercenta a 401(k) plans over time. nd non-lifecycle balanced 5.2% $12,498 ge of a individ 9.6% ccount balances (net of the u u7. al participant rillion 4% ent held them $17,735 in 401(k) plan assets we 21.1% Cross long-term employees have fu8. n -d experience, often influenced sections change in composition over 7% s: 31 percent at year-end 20 $23,024 49.5% 1.9%npaid loan bala of 401(k) participants $18,779 08. Lifecycle fu 1. re participant 4%had mor nce) for 100% bye time the nd 2008 and Month-end Level, 12.4 percent change 20% 48% December 1996 to August 2009 d the asset allocation of their contributions d 9 uring 2008 (see Investment Company Institute, Present From Year-End 1999 Through Year-End 2008 between year-end 2007 a 19 percent of the account bal With Two or Fewer Years of T nd year-end 2008 ance assets of enure.............................................................................................. (Figure 20, lower panel). recently hired participants in their 20s at year-end 2007; no ............................... n-lifecycle funds were 42 $70,000 Present From Year-End 2003 Through Year-End 2008 Participants, by Age and Salary, 2008 a a provider adjusts to become more conservative over time. Non-lifecycle balanced funds include asset allocation or hybrid ________. “Contribution Behavior of 401(k) Plan Pa U.S. Government Accountability Office. “401( allocation o 80%50s 17% f assets in an individual’s accou k) Pension Plan 6% nrticipan t; and 17% ts During Bull a s: Loan Provisions Enha17% nd Bear Mar19% nce kets.” Participation but May A National Tax Association 19% 19% ffect Income VanDer Relationship Bet balance would tend to be pulled down if a la http://journals.cambridge.org/a hei, Alonso, and Copeland (2008), an ween Account Bal ction/displayAbstract?aid=2197036 arge number of d Holden, Van nces and Salar EBRI/ICI 401(k) Database D participants retire and roll over their account balances. erhei, and Alonso (2009). Re y sults for earlier years are available in 9% Retirement sav and Investment Options Among Participants With Two or Fewer Years of Tenure ings held in plans at previous employers or rolled over into IRAs are not included a in the database. Furthermore, 30s EBRI/ICI 401(k) database vs. Cerulli estimates for all 401(k) plans, 2008 All $19,316 $26,660 $33,816 $43,915 $53,464 $39,883 All50s 57.6% 58.8% 57.4% 57.9% by Plan Size and Investment Options 16% 7% 14% 53.9% 51. 16%2% 49.5% 13% 45.2% 42.3% 39.6% 12% $65,454 16%37.8% Over the past tw40s o decades, 401(k) plans ha 10.9% ve grown to be 5.6% 6.6% the most widespread private-sector employe 10.7% 31.1% 35.1% r-sponsored time because the selection of data providers and sample of to accumulate an account bal loans. In addition, only $535 milli participants with loans was 16 assets represe held lifecycle funds, relation 40sship amon 50 nted 9 percent 44. g th 23 perce 1% e three factors men 6. n a of the assets of plan percent at yea t held no nce. However 8%on flowed n-lifecycle balanced t 8. ion Percentage of account balances, 2% out of 401(k) plans as the res , a rollover from a previous e e r-end 2008 (Figures d above: con s offering 10.9% tfund plan such funds in t ribu 5. s using s, and nea ti7% 46 a ons, investment returns, nd 4 a g mployer’s urly 3 percent held both. The increase in bala 9). In addition, as in previous lt of h i10. ven provider v eir investment lineups. 4% 2008 converting a loan into a plan 10. could interfere with this positi a 1% and ry from year t withdrawal and loan activi 2.3% 9% withdrawal/distribut o years, there is year and bec 1.2% 100% ve nced ause ty. ion 260 4% 10 16% 2009a). Furthermore, Choi et al. (2001) find 66% 5% s that 401(k) participants rarely made changes after the initial point of enrollment. Retirement and health benefits are at the heart of w Figure 36 orker 13% s’, employers’, and our nation’s Figure 5, 401(k) Account Bala 9 percent. Copyright Information: Security for Some.” Proceedings, Ninety-Sixth Ann 50% The 44%60s pattern o Letter Report f This report is cop lifecycle and no nces Am ual Conference , GAO ong 401(k) Participants Present From n- -HEH y lifecycle fund us righted by the 9% 9% S on Ta -98-5. Washington, DC: U.S. xation, November 13–1 Employee Be e varied with participant age 9% nefit Research I Year-End 2003 Throug Tenure Government Accountability Office, Oct 5, 2003, Chicago, Illinois. 10% 10% nand lineup of p stitute (EBRI). It may be use h Year-End Wa lan investment 11% shington, DC: 2008 ............11 ober d funds, in addition to lifestyle funds. 21% Company stock is equity in the plan’s Average b sponsor (the employer). Money funds consist of 18% b >2-5 $6,210 $13,630 $21,547 Participant Age Group $31,456 a $41,072 $61,346 $32,336 earlier issues of Figure 40, Recently Hired 401(k) Plan Participan Investment Company Institute Perspective 1 ts Are Less ( Likely to www.ici.org Hold /pComp erspective/index.html any Stock ....................................... ) and EBRI Issue Brief ............43 Comparison of 2003–2008 Consistent Group of 18% 2003–2008 Consistent Group 401(k) Participants to EBRI/ICI 401(k) Database acco Participants’ ac 18 unt balanc 60s es are net o count balances f u 54.1% n vary no paid lo Percentage of account balances, 55.5% an bala t o 17 nly with age and t nces. 53.6% Because o 55.7% enure, f all 51.0% but also these factors, it is not c 49.5% 1998 and 2008 with salary. Figure 16 reports the account b 47.8% 43.9% orrect to presume that the change in 40.4% 38.4% 38.7% alances retirement plan in the United 50s Age Group 50s 35.2% 6. States, 2% 13.0% and no Percentage of account balances, 8.3% w serve as the 8.2% 12.7%8.4% most popular defined 7.3% 20.7% 16.2% 2008 contribution (DC) plan, 22.8% 10.5% 26.8% 2.5% representing the 0.9% 100% a correlati 401(k) particip Participants who (“deemed distribution of participant loan Similarly, there was a small d variation aroun 401(k) Plan Asset Allocation, Account Balances, and Loan fund About half of t 1997. Available at National Tax Association, 200 use between year-end 2 on because a rollover could give ants join or leave plans. d this average were yo raditional IRA assets resulted www.gao.gov/archive/1998/he98005.pdf unger o ecline in the 007 and that corresponds with age (lower r had fewer 4c, 44–53. year-end 2008 res In ad s”) a sh pe . See U. rcentage of par years o o from rollovers dition, the database contains rt-tenured emplo S. f tenure Department o ulted from the increased use of li t icipants alloca experienced the largest incre from employer- the older t y ee a high a f Labor, h ting 100 Emplo e participant), tenure (lower the higher the cco only th spon unt bala sy ored retir e account balances hel ee B perce nce. There is some discernible evidence enefits Security A nfecycle funds; a t of their accounts to equity f ses in aver ement plans. See Brady, Hold agat year-end 20 e account bala dministratio d in the 401(k) n 07, nce tenure unds plans en, Brady, Peter, Sarah Holden, and Erin Shor economic security 70% . Founded in 1978, EBRI is 17% t. “The U.S. Retirement Market, 2 21% By Age Group the most authoritative and objective source of 008. ” Investment Company Institute • Withdrawals, b Tenure (years) orrowing, and loan repayment >5–10 $14,289 s. $21,320 $28,381 $37,911 $58,328 $47,121 32% $35,789 59% 21.9% 40 options. 21.5% without permis Recently Hired Participants Now Hold Higher Concentrations in Balanced Funds sion but citation of the source is required. c those funds de Salary Range signed to maintain a stable sh 20sare price. Stable- 30s value products, such as 40s>30 Years guar50s anteed investment co 60s ntracts 240 $60,000 40% c (www.ebri.org/publications/ib Holden and VanDerhei (2003) Established in 1978, the Employee Benefit 23% ). presents a similar analysis of 33% changes in asset allocation among a consistent group of Figure 6, Avera 20s ge Account Balances Among 4 Equity 30%01(k) Participants Lifecycle 30% Figure 1 Non-Lifecycle Present From Year-End 2003 Through 28% Bonds 24% Money25% GICs Year-End 2008, /Stable- 29% Company 2 the average or of long-tenured participants a All median accoun b 60.5% tt balance for th their current employers’ 401 61.0% 60.0% 58.7% e database as (k a whole reflects the experience of “typical” 401(k) plan ) plans. Retir 55.3% 51.6% 51.0% ement savings $56,878 46.3% 42.0% 38.7% held at previous employers or 25% 36.2% 60s 55% 18.6% $55,502 10.9% 23% 16% 11.9% 1999–2008 Consistent Group 16% 19.0% 16% 16.5% 16% 16% 23.1% 16% About 2 in 5, or 6.0 million Figure 41, New Participan 60s 28.0% ts Ten , of 5. the 401(k) par 5% d Not to Ho 7.7% ldt High icipants with Con 14.c 5% en accounts at the end of 2003 in tration 9.4% s in Compan 23.y S 2%tock.............................................. 8.4% the EBRI/ICI 401(k) database 2.6% 0.7% ............ 100% had 43 largest number Fundamentals. of participants and assets. In S&P 500 Vol. 18, no. 5 (June 2009). Av >10–20 $27,792 2008, 49.8 millio ailable at $35,616 www n American workers were active 401(k) plan participants. .ici $42,881 .org/pdf/fm-v18n5.pdf $53,881 $63,989 $46,629 By of rollover assets among the p (Figure 20, low between year-end 1999 a (2008c). of the participant), account balance (lower th 25 percent of 4 and Short (2009). at participants’ 0–2 er panel). At year 01(k) participants held lifecycle funds. current emplo 17.4% nd year-end 2008. ya ers. rticipants -end 2007, Retirement savings h with account balan For example, the averag 11.1 percent of participants with e higher the ac 1996 6% (Median A eld in 1999 5% c co es greater tha plans at pre g unt balance) e: 44 Years 2002 e account balance of participants in their 20s ros 4% vious employers or ,n and salary ( 2006 $100,000 as ) accounts in 5% 2007 loboth 2007 and w 1 percent of th errolled over into individual the higher 2008 7% 2008 were 100 em had two or fewer the participant’s 6% e per- information on these critical, complex issues. 11 12 20s 25% Balanced Funds b 40% 37% Asse Activity in 2008 t Allocation by Investment Options and Age, Salary, and Plan Size (GICs) and $20,000–$40,000 other stable-value funds Percentage of recently hired participants holding , are reported as one category. The $4,757 $15,458 Non-Lifecycle $42,933 other category is the residual fo $59,457 15.7% $50,707 r other by Participan 30s Plan Assets t Age and Tenure.................................................................................................. 22% 20% 22% 19% 19% ................................... 25% 12 Funds Funds Balanced Funds >20–30 Years Funds Funds Value Funds Stock participants with account bala U.S ________. “The Influe . Intern Source: Tabula al Revenu tion e sS nce of Automatic from ervice. “Noti EBRI/IC nces at the en I Pc ae of P rticipan Enrollment, Catch-Up, and IRA Contri t-Dire ro d of each year posed Ru cted Retiremen le Making, Certain Cash or Deferre 55 from 1999 through 2002 t Plan Data Collection Prbutions on 401(k) Accumulations at oject. in thd Arrangement e EBRI/ICI 401(k) database. Holden, s Under Employee 3 The cha $140,000 nge in 40sany individual All 401(k) Plan Characteristics, by Number of Plan Participants, 2008 Allparticipant’s 12.4% $48,092 acco 6.1% unt balance is influenced by $59,7277.0% $70,115 13.1% $51,569 the magnit $86,165 23.8% udes of these thre $100,744 37.5% e factors relative to $74,148 participants. amounts rolled over to IRAs are not includ 7 All 37.4% 6.6% 8. ed in the analysis. To capture as 2% 12.3% 18, 19 7.1% long 15.2%a savings 9.7% history as possible, only long 2.4% d 1.0% 100% - 42 220 60% >2–5 13.2% 15% 14% 12% 14% 15% 15% accounts at the year-end 2008, 401(k) plan as end of each Researych Institute (EBRI) is the only ear from 2003 sets had grown through 2008. to represent 16 pe Figures A1 and rcent of all retirement assets, amounting to $2.3 trillion. A2 compare the age and c tenure distributions of In Recommended Citation: Jack VanDerhei, Sarah Holden, and Luis Alonso, “401(k) Plan Asset Allocation, Account years of tenure 700.0 percent (a 26.0 percent cent invested in equity f retirement acco Comparing recently hired part salary). Overall, loans from 401(k) plans te Acco unt balan Equity ,c unts ( and 3 percent es are net o IRAs) unds. are no f At year icipants in 200 unpaid lo of them had b annu t included in the an al average -end 2 Lifecycle an bal nd 008, 8.5 percent continued to hold 100 8 with their simila etween two and five years of a ed to be small, with the vast Lifecycle growth rate) be nces. Non-lifecycle Thus, alysis. unpaid r age groups in 1998 also tween the en loan bala Bond majority tenure (see Figure 12). nces are not included in any o d of 1999 and of 401(k) participants in all age grou percent of their accounts in equity Money illustrates that asset allocation to the end of 200 GICs and Other $142,024 8 f the eight asse (Figures A9 an Company funds. ps t d 12.4% 33% 13 55 19 Figure 42, Asset Allocation Distribution of Note: The analysis includes 401(k) Equity plan par Recently Hired Par ticipants with $49,024 two or 60s fe a,b wer Balanced ticipant Account Balanc years of tenureBond in the year indicated e to Company Money and in GICs a pStock in 401(k) Plans lan o /Stable- ffering company >5–10 Years Company Investment Options, All Age 40s >$40,000–$60,000 s $9,107 16% 15% $23,154 16%$52,893 13% $71,59113% $73,834 18% 10.5% >2-5 $13,240 $23,320 $33,471 $46,380 $58,732 $45,960 10.4% investments, such as real est Plans.” Retirement.” Federal Register. (percentage of plan assets) Investment Company I aVol. te funds. 46, no. 217 (November 10, 1981): 55544–5 The nstitute Perspective. final category, unkno Vol. 11, no. 2, and wn, co38% nsists o 5549. f funds th EBRI Issue Brief at could no , no. 283 (July 2005). t be identified. Cerulli Associates. “Retirement Markets 2008 By Jack As discussed a The value of t Acco Sourcunt balan e: VanDerhei, TabulaSource: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. b tion ove, asset allocation varies h ces are net o is percentage s fro EBRI; m EBRI/ S ICarah Hol If P unpaid lo a is lower rtic9.8% ipand t-en, Dthan it would have be an bal irec I with participant age. Thus, Figure 23 prese ted CI; an .” R aCerulli Quantitative Update nces. etired Luis Al me nt Plan D onso, EBRI aen if it were ta Collection Proj . Boston, MA: Ce merely reflecting employee turnover and ect. nts the analysis rulli Associates of asset allocat Inc., 2008. ion by >5–10 balanced fund assets, 24% 23% 1998, 2006, 2007, and 2008 21% 20s 22% 23% 23% VanDer the starting ac hei, and $50,000 co Quick (2000) includes an unt balance. For example, $47,004 ana a co clysis of change ntributio b n o Figure 37 f a s in given dollar equity fund asset allocations am amount produces a larger growth rate when >10–20 Years 4 ong participants with account added 5 tenured participants are included in this analysis. However, it is important to note that the tenure variable is the time that Figure 7, Percent Change i Lifecycle fund use varies with n A participant ag verage Account e and ten Balances Am ure. Yong 401(k) Parti ounger participants were more likely to hold cipants Present From Year-En lifecycle funds d 2003 Throug than h the 2003–2008 Balances, Number of Plan Participants stock as an and consistent group with the cross-sectional da Loan Activity i investment option n . 2 7.9% 008, Total Plans ” EBRI Issue 7.9% Total Participants Brief, no. 335, and tabase. Figure A3 highlights t ICI Perspective, Total Assets Vol. 15, no. 2, October 2009. he distribution of account balance Average Account Balance 7.8% an ongoing collaborative effort, the Em EBRI focus a es solel 7.3% y on emplo Fundsployee Benefit Research Institute (EBRI) funds yee Funds benefits research — no lobb Funds Funds and the Funds ying Investment Company I or advocacy Value $45,519 Stock nstitute (ICI) Age A10) having In addition, 1.2 percent of par company stock and equity a with . Bno ecause yo Compan lo Funds an at all ( y S unger participants’ acco tock, by Figure 50) fun Total Age ds was lower in 2008 th ticipants ...................................................................................................... had in unt balances tende creased their a balanced funds an in 1998, wh d to sset allocation be small (Figure A9), con Funds ile asset allocation to fixed- to equity funds Fundst to 100 percent at year-end 20 ributions prod Stable-Value Funds income s .................................. uced significant ecurities tended to Stock 08 43 categories described. Equity, bond, money, and/o 50s 38% 28% >5–10 Average r 6.7% $22,002 12% 6.4% $31,270 11% $40,337 12% $52,627 10% $64,286 10% $48,848 13% 200 30%>$60,000–$80,000 $20,590 $40,359 $87,259 $111,732 $119,904 33 E Available at BRAverage I Employe Equities include equity funds, company stock, and the equity portion of balanced funds.“Funds” include mutual funds, www.i e Beindependent nonpr nefit ci. R org/pdf/ esearch Ip ner11-02.pdf stitute Issue B 6.2% ofit, nonpartisan and rief (IS www.ebri.org/pdf/briefspdf/ebri_ib_07-20054.pdf SN 0887 5.3% -137X) is published monthly by the Employee Be nefit Research Institute, A lifecycle fund typically rebalances to an increasingly conservative portfolio as it approaches and passes the target date of the fund, which is usually >10–20 5.5% 31% 27% 5.5% 26% 26% 26% 26% 4.8% 26% a investment options and also b 50% y participants’ age. Salary in $43,215 formation is available for a subset of participants in the 2008 5.0% 4.5% $125,430 $114,337 retirement. The EBRI/ICI 401(k) database h Because 401(k) plans were introduced about 28 years as added data ago, provid even older and ers since 2003 and 3.9% longer-tenured employees would not have by definition participants in these plans balances at the $120,000 Year-End 2008, by Partic end of each 13.2%y ipant Age ear from 1996 and Tenur to 1998 in the 4.1% e................................................................................... EBRI/ICI 401(k 4.5% ) database. ..........................12 20 to a smaller acco Plan Size by Number of Participants unt. On the other hand, investment returns of a given percentage pro 4.0% duce larger dollar increases (or individuals hav To explore the questions of the impact of older participa 1–10 Many Recently Hired Participants Hold High Concentrations in Lifecycle Funds n e been at their ts. At year-end 2008, 43 per >10–20 current jobs $49,714 ongoing participation in 401(k) plans an an cent of participants d may not refle $61,158 3.2% ct the length of time in their 20 $71,347 s held lifecycle funds (up >5–10 Years $87,298 they hav d to u 3.4% 3.6% nderstand e participated in a 401(k) plan $101,782 3.3%how typical 401(k) plan from 29 percent of $73,976 1100 1360s th S EBRI stand t. NW, Suite 8s alone in em 78, Washington11,185 , Dpl 10% Coyee ben , 20005-4051, efits rese at 63,104 9% $300 pear r ye ch a ar 10% or sis an inde $2,650,922,836 included as pend 8% part eof nt, nonprofit, and no a m 3.0% ember 8% ship su $42,009 bscript 11% ion. npa Pe rtisan riodi- Group sizes across the database at collect annual balanced funds 1998 data on million 2008 1998 $41,156 y s of 401(k) ear-end 2008, 2008 44.7% 2008 plan participants a the 2003–2008 Percentage of Account Balance Invested in Balanced Funds 11.9% 2008 s a means to a cons1998 istent group, and the 2.6% 8.1% 2008 ccurate 19.8% 1998 ly portray how these p 192008 12.1% 99–2008 consis 1998 atent group. Figures rticipants man 2008 1998 age 2008 U.S. Joint Com Size of 401(k) Account See Figures A included in the fu bank collective trusts, life insurance separate accounts, and any pooled investment product primarily invested in the m n6 d ittee on Taxation. and A7 in ’s name. the Balances appendix, which compare Technical Explanation of H.R. 4, the “Pe the age and tenunre composition of the 1999–20 sion Protection Act of 2006.” as Passed 08 group to the by the acco from lower allocations at year Choi, James J increase (Figure 39). Recently hired 401(k) participants gen unt balanc >$80,000–$100,000 .,e gro David Laibson, Brigitte wth. In contrast, -end 2007. However, 2.6 percent of the aver C. $31,851 Madrian, age acco and And unt ba $64,267 re ew Metrick. rally were less likely to hold lance participants reduced t of older participan “Defined Co $129,489 2.1% ntributio ts or th h $162,674 company stock (Figure 40) and eir allocation to equity funds ose with n Pensio >2–5 Years 29% lon ns: Plan Rules, g $174,981 er tenures sh from owed >20–30 33% 25% 26% $39,88525% 1.8% 24% 1.5% 24% 25% 8 Report availability: This report is available on the Internet 32% at www.ebri.org and at www.ici.org 36% EBRI/ICI Figure 43, Percentage of 401(k) Plans Offering Loans, by Plan Size, 2008 ....................................................... b, c ....................44 35 EBRI/ICI 401(k would not be included in the participated in 401(k) plans for their enti This system of 180 b calAll Plans s postage ra ) classification d database. Because asset all te paid in W >20–30 asconsistent hino gt es not consid on, DC $87,148 group. Moreover, any time a 401( , an re careers. The Re d a odcation is influenced er the number ditional $103,135 mailing o venue Act of 1 ffi of ce distinct investment options s.$116,162 P by the in OSTMAS 978 cont k) plan vestment options availa TER$138,666 : S sponsor changed ser end ained addres a provision that became Inter presented to a s $158,358 changes ble to 29% to: v EBRI Iss ice providers, all participants, Figure 24 $116,064 given participa ue Brief, 11 n00 al n t, 100 organization committed exclusively to data Distribution of Plans, decreases) when compounded on a larger a 11–25 orga security indicated. nization. It analyzes a Participants, and Asset nd rep sset base. orts res b seay r Plan Size ch data without spin o r underlying agenda. All findings, (particularly among older participants, since 401(k) GICs are guaranteed $37,323 inPercentage of recently hired participants holding the type of fund indicated, vestment contracts. 11,796 plans were introduced only about 28 202,518 9% 1998 $7,875,847,719 years ago). 2008 $38,890 51 ALLHolden, Sarah, Jack Van participants in their 20s at ye 41 participants have fared over a given time per Equity, bond, money, and/or House on July 28, 2006, and $40,000 Derhei, and Luis Alonso. “What ar-end 2007), compared with 22 pe as Considered EXECUTIVE iod, it by the Se is import Can Consistent P nate ant to analyze on August 3, 2 SUMMARY rcent of a participants in their 60s in 20 rticipation in $99,864 a group of consistent participants (a longitudinal >2–5 Years 006. JCX-38-06 401(k) Plans G (August 3, 20 enerate? 08 (Figure 31). More 06). Washington, ” Investment Figu A4 and A5 re 8, Domestic S Participant Decisions, and the Path of Le Tenure (years) provide information on the tock and Bond Maasset al rket Indexes ast Resistance.” location of participants in ............................................................................... NBER Working Paper the 2003–2008 con . No. 8655 (December 200 sistent group by age. ............................ 1). 14 year-end cross-sectional EBRI their accounts. >30 /ICI 401(k) database. 7.9% 13% Figu 16% re 41 15% 17% 17% 7.8% 18% more modest growth (Figure 100 percent to less than all of tended not to >$100,000 hold a high conA10). For exam ctheir account. entration o $31,342 f their acco ple, the averag On net, the per unt balance in co $92,098 e account bala centage of part 13% mpa $194,227 n nce of part y sto icipants ck (with their full account balance allocated Ficipants in their 60s igures 41 and $250,800 42). $258,841 increased 19.7 per- to See Figure A1 20% 40% 3 in the appendix for a detailed presentation of the changing percentages of account balance invested i 34% n At year-end 20 13th St. NW b,08, the averag Suite 878, Washe account bala ington, DC, 20005-4 nce was $45,5 051. Copyright 19 an 2009 28% d the by Em me ploye dian account b e Ben $106,180 efit Researc alance was $12 h Institute. All right ,655 (Figure 9). There s reserved. No. 335. c 50s All c $79,627 $95,049 $107,945 $129,073 $148,043 $113,070 1–100 40.7% 9.0% 12.9% 11.9% 13.8% 9.4% 0.1% $104,734 Participants include the 24.0 million 401(k) plan participants in the year-end 2008 EBRI/ICI 401(k) database. presents asset $100,000 allocation by salary range a 5.5% nd by investment options. Participant asset allocation also varies with plan size Revenue Code participants in the plan would be excluded fr but rather the t Row balanced funds; and GIC pe Age Group rcenta wheth ge Sec. 401(k). The law went into effect on Janu ys pes of options presented. Pre may no er on fi t add up nan s to 10 cial data, 0 perce >0–50 percent nt boption eca om the consis luse iminary rese os f ro , or tre unding.nds, are reve tent group. For the year-end 2 ar Pech analy ary 1, 1980, bu rcentage >50–90 percent s ar zing 1. e do aling an lla 4 million participants drawn fr t it was not until November 1981 that proposed r-weighd reli ted aveable — the re ra003 EBRI/ICI 401(k) database ges. >90 percent aso om the 2000 n EBRI informatio n is 20s Company Institute Perspective DC: U.S. Joint Committee on 66.9% 26–50 0–2 80 36.3% 7.4% 35.8% Taxation, 2006. Available at . Vol. 15, no. 1 9,241 22.6% 27% , and 13.2% 336,060 24% EBRI Issue Brief www.j 5.1% 27% ct.gov , no. 332-SR (July 2009). Available at $12,661,215,376 8.9% /x-38-06.pdf 4.0% 23% 4.6% 21% 3.7% $37,675 6.1% 4.8% 25% 10.5% 5.8% Figure 44, Percentage of Eligible 401(k) Plan Part Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. icipants With 401(k) Plan Loans, by Plan Size, 2008...................................44 recently hired participants were more likely to hold lifecycle sample). This consistent group of participants is drawn from funds t the annual c han paross-sections. rticipants with more years on This report, for the first time, analyz the job: At year-end es The 2008 Because 401(k EBRI/ICI 401(k) database contains Acco ) balances can unt Size fluctuate with market returns information on 54,765 401(k) plans with 4.1% from year to y ear, meaningfu $1.092 trillion in assets and 24.0 l analysis of 401(k) plans mus t million 160 dissemination, r >2-5 $19,952 esearch, and education on $31,122 $41,772 0–2 Years $56,042 $70,177 $57,050 Percentage of Account Balance Invested in Balanced Funds cent (a 2.0 percent ann equity fun equity fun 101–500 ds e ds a a dged down slightly in mong the 18.0 New Part ual av icipant erage growth rate) between year million 401(k) pa 42.4% s T 2008 to end Not 9.7 percent of participants. rticipants with account bala 9.9% to Hold Hi 3.2% 9.8% -end 1999 a gh Conce $95,77714.7% nces in th nd year-end 2 ntrations e EBRI/ICI 401(k) database at y 11.2% i 0n Comp 08. Investment Barclays Capital U.S. 8.8% any St returns, rather ock $86,513 0.5%ear-end than 21 Figu is wide variation in 401(k) pla re 9, Snapsh Note: Row percentages may not add to 100 percent because of rounding. ot of Year-Enn d participan Account Balan ts’ account balanc ces................................................................................ es at year-end 2.6% 2008. Abou 33% t three-quarters of the participants in ..............................16 Note: “Funds Account balances are based on administrative records and cover the account balance at the 401(k) plan participant's current emp ” include mutual funds, bank collective trusts, life insurance separate accounts, an 2.1% d any pooled investment product loyer. Retirement primarily invested in the www. and/or other stable-value funds 20s ici.org/pd the gold sta f/per15-01.pdf ndard fo and r priva www.ebri.org/pdf/briefspdf/EBRI_ 39.8% 84.9% te analysts a 5.3%$83,441 nd decisi 12.6% on make 7.3% IB_7-2009_No332-SR_ConsistPart.pdf rs, gove 8.3% 1.8% rnme 0–2 Years 4.9% nt policym 7.8% 25.5% akers, the media, and 6 30s Delo All told The value of t itte Co 67.8% , from year-end 2003 t nsulting LLP, >2–5 43.1% his percentage 8.0% Intern hatio 28.4% rough year-en is lower nal Fo17.1% than it would have be undatio 24%d 2008, the av n, and the 11.3% 25%In erage ternational Society of Certifi en if it were 5.1% account 25%10.3% balance among merely reflecting employee turnover and 4.1% 21% e 5.5% the group of consistent participants d Employee Benefit Specialists. 1.5% 22% 3.2% 5.7% 26% 9.4% 5.0% ( Older, This regulations were issued (see Holden, Br update, see Holden and EBRI/ICI 401(k Figure 25, re lo port is bein nger-tenured, top panel) ) database sug g pu , and but much o blis Van he hi Dgher- erhei (2004a a d simulta gests that the ifnco the vari me participants tend to n ady, and Hadley (200 eou atio n sheer number sd 2004b). ly as an n can be explai EBRI of in Issue Br 6); Employee Benefi ned by diffe have large vestment ief an roptions presented does not influence participants. acco rences in the investment options offered by p d ICI unt balan Pers t Research Institute (20 pect ces, ive which are impo and is available on 05); and U.S. rtant fo both r meeting lan 51–100 7,585 538,981 $19,970,796,991 $37,053 d This report is an update of EB <$10,000 >5–10 RI and ICI’s on 19% 19% $25,434going research 12% $35,39911% 11% into 401(k) plan participants’ $45,165 $58,37312% activity through year-end 20 $71,09611% $56,28212% 08. The 30% 60 50s examine ho 2008, 44 percent of participants with two two different co 501–1,000 savings held in plans at previous employers or rolled over into IRAs are not included. Account balances are net of loan bala w participants’ acco nsistent groups drawn from unts have p 41.0% or fewer years of erfo the database: ( r9.2% med over the lo 1 tenure held lifec ) a group of 6.0 mill 9.8% ng term. Lo 14.8% oykcle funds, compared with 27 percent of ing at co ion participants with acco 9.6% nsistent Aggre participants in the EBRI/ICI gate Bond Index nces. 9.8% unt balances 2.8% at the participants (Fi $30,000 gure 1). Most of the plans in the database are small: 42 per 34%cent of the pla 30s ns have 25 or fewer participants, and Age Group security indicated. >0–50 percent >50–90 percent >90 percent annu Figure 45, Loan Balances as al co 10% ntributions, Percen generally acco tage of a Percentage recent unt fo o r mo fly hired 401(k) Account Balances for Participan st of the change in participant accounts with larger balances s offered company ts With 401(k) Plan stock hold . In addition ing t Loans, by Pla he , participan n Size, ts in 2007 and year-end 2008. VanDer Anal the 2008 EBRI/ICI 401(k) data Equity, bond, money, and/or Annual 40 ys hei, is of the 1999–2008 Consistent Group 30s Jack L. 1(k) Benchmarking EBRI Special Report Com base had Surveyaccount balances t 2009 E 86.0% pany 30% dition Stock in 4 . New h01(k) Plans: Re at Yor were lower than $45,519, t k, NY: Deloitte 7.6% sults of a Sur Consulting LLP, vey of ISCEBS he size of the a 2009. Available at 6.4% Members. verage account (Employee 40s140 64.5% b >5–10 the publi 41.9%economic security and employee benefits c 9.7% . 26.5% 15.2% 23% 11.3% 21% 5.9% 23%10.9% . 5.1% 19% 5.9% 18% 4.4% 7.4% 24% 8.0% 5.2% $73,253 $82,003 grew 41.6 percent, rising from $61,106 at retirement. The EBRI/ICI 401(k) database h $80,000 $10,000–$20, 31%>10–20 000 $56,952 ye aar-end 2003 to $86,513 at ye s added d 26% $69,714 ata provid23% 22% ers since 2003 and $80,981 ar-end 2008 (Fig $98,39726% by definition participants in these ures 5 and $114,09025% 24% 7). This translate $86,56026% plans s into sponsors. For e their income-re organiz 101–250 ations’ Long-tenured participants are used in this analysis to capture as long a work and savings history as possible. The tenure var We p xample, the percentage of pla lacement nee b sites at ww ds in retirement. For long-ten w.ebri.org 6,713 /pn ubl assets invest ications/ 1,064,768 ib and ured ed in company participan www.ici. $38,929,948,815 org/research/perspect ts in their 20s stock rises with with salaries between $20,000 to plan size. A portion of this tre ive iable tends to be years $36,562 nd Figure 10, Distribution of 401(k) Account Internal Revenue Service (19 On average, participants have 81)). 10.4 distinct op 16% Balances, by Size tions but, on average, choose only 2.5 (Hold of Account Balance................................................. 16% 16%en and VanDerhei, 2001a). In ..................17 1,001–5,000 40.0% 8.6% 9.3% 14.2% 7.8% 11.6% 4.8% report is divide 56 20s d into five sections: Th 26.1% e first describes the EBRI/ICI 401(k) data 11.8% base; the second focuses on changes 62.2% in end of each ye participants with five to 10 ye The net changes in percentag ar at least from year-end 2003 34% ars of tenure, a es of participants 100 percent n through year- d 16 percent of end invest participants with more than 30 years of te 2008, an 57ed in the d (2) a consistent group of 2.1 million particip non-equity fund EBRI/ICI investment categories nure (Figure 32 ants ). 401(k) databas 31 percent ha 2008 balanced funds; and company ........................................................................................................................... 40ve 26 to 100 par e over the five-year period from 2003 to 200 ticipants. In contrast, only 6 perc Size of Account Balance Fi 15% 8 (whi gurent of the plans ha e 31 ch included one of the ve more than 1,000 p worst bear markets for stocks since ............................................... 15% 24% articipants. However, 45 Holden, Sarah, Jack VanDerhei, Luis Alon Year-End 2008 Benefit Research Institute, January 2 40s Snapshot of 401( so, and Craig Cop 002). Available at 84.1% k) Plan Loan Activity 27% eland. “401(k) Plan Asset www.ebri. 15% org/pdf/ 8.9% iscebs.pdf Allocation, Account Balances, and 7.0% Loan 50s The value of t www.de 60.5% with the current employer rather than years of participation in the 401(k) plan. Particularly among older participants, job >10–20 loit 35.1% te.c his percentage om/assets/Dco 11.3% 26.4% is lower m-The Em 14.5% than it would have be 15% ployee Benefi 11.9% 14% t Research Institut en if it were 6.6% 16%12.8% merely reflecting employee turnover and e (EBRI) was founded in 1978. Its 5.9% 13%30s 7.6% tenure may not reflect length 13% 6.7% 11.2% 17% mission is to 6.5% 4.9% their 60s tend to have a percen highe >20–30 tage of r propensity to make withdrawals. the $120,920 ir account balance in 25% $141,472 dicat $158,138 ed in company $186,832 stock, $212,560 1998–2008 $160,521 balance. In fac >$20,000–$30,0 t, 45.6 percent of participants had account b 27%00 26% 25% 22% alances of less than $10,000, 27% while 12.6 percent of participants 26% 26% 42 251–500 >5,000 PARTI 20% CIPANTS’ AGES, TENURES, AND ACCOUNT 35.6% 3,195 5.4% 1,125,450 7.3% BALANCES $39,531,956,652 11.3% IN THE 1999–200 5.8% 8 CONSI 17.6% S$35,125 TENT GROUP: 13.1% About 1 an annual a would not be included in the verage growth rate of 7.2 percent over the five-yea consistent group. Moreover, any time a 401( 13% r period. The median account ba k) plan sponsor changed ser lance (or midpoint, wi vice providers, all th half occurs because few small plans offered company stock as an $40,000, the median account 30s of participation in the 401(k) plans; the regulations for the 401(k) plans were introduced about 28 years ago. $61,106 balance was $4 33.5% ,757 in 2008 (Figure 16). Longer-tenured pa investment o 16% 13.3% 24% ption. For example, less than 1 percent of rticipants in their 20s earning 53.2% more addition, the preliminary analy See Figure A1 120 $67,142 3 in the appe $67,411 ndix for a deta sis finds that 4 iled presentation of the cha 01(k) participants are not naï nging perc ve—that entages is, when given “n” o of account balance invested i ptions, they do not n participant account balances stock over time, an $66,791 34.8% alyzing a group 4.8% of consistent 401(k) partic Figure 22 5.7% 12% 18.9% ipants; the third p 12.0% 14% resents a sn 60s ap 20.5% shot of 34 Activity in 2007 Ass 50s et Alloca .” Investment tion Distribution of 4 Company Institute Perspective 81.1% 01(k) Participan . Vol. 14, no. 3 t Account Ba 10.7% , and lanc EBRI Issue Brief e to Balanced , no. 324 (December 8.2% Funds, by Cerulli Age 60s with accounts at the end of e the Great Depr were generally small. The largest net change UnitedStates/Local%20Assets 50.0% >20–30 29.3% ession), the study found: 12.1% >30ach year at lea 23.0% /Documents/us_cons contribute to $121,514 11.5% 11% st from year involved the s , to encourag $140,254 11.5% 10% ulting_401(k)AnnualBen -end 1999 throu hare of participants completely e, an $153,928 8.7% d to enhanc 11%13.8% gh year-end 2 e the developmen $179,468 chmarkingS 7.8% 9% 008. The “2003– 9.5% eschewing bo urv $201,302 ey2009_0814 t of sound empl 8% 13.3% 2008 consistent group” nd fu $155,309 17.8% 09.pdf 12% nds, o 3% yee ben which 5.7% efit 4.8% Figure 11, Age Composit participants an Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. 20 d assets are concentrated in l ion of Selected 401(k) Account Ba arge plans. For ex lance Cate ample, 80 percent of participants are in pl gories ....................................................... ans with more than .................17 0% >$30,000–$40,000 25% 25% 23% 26% 26% 26% retirement. The EBRI/ICI 401(k) database h There are two possible explanations for 11% 11% $62,280 the as added d low account ba ata provid lances among t ers since 1999 and 11% his grou by d p: (1) their employer’s 401(k) plan ha 11% efinition participants in these 11% 11% plans s All $20,000 37.4% 6.6% 8.2% 12.3% 7.1% 15.2% 9.7% Figure 46, Few 401(k) Participants Have Outs had account ba EBRI explo lances greater res the breadth of emplo than $100,000 (Figure 10). The variat tanding 401(k) yee ben Loans; Loans efits and related issues ion in a Te ccount balances partly reflects the effects of nd to be Small, 1996–2008.............................45 40s in 5, or 2.1 million, of the 401(k) partic $60,000 40s 501–1,000 a 33.9% ipants with accounts at the end of 1 1,979 1,392,504 13.5% $52,280,568,769 999 in the database had accounts at the e $37,544 52.6% nd of above and Who we are half below) among this consistent group also grew, rising 71.3 percent from $25,507 in 2003 to $43,700 in 2008 participants in small plans were offered company stock as than $100,000 VanDer participants in the plan would be excluded fr Equity, bond, money, and/o hei, Jack, and Craig Copeland. “The I had a median account balanc r 10% om the consis e of $31,342. Among mpact of PPA on Retirement Savings for 401( tent group. For the year-end 2 an investmen long-tenured participan t option a,b , while 66 percen 003 EBRI/ICI 401(k) database ts in their 60s k) Participants.” t of participants in plans with with $20,000 to EBRI Issue Brief , equity fun divide their ass 2008). Available at ds a 60s The EBRI/ICI 401(k) database at year-end 2008 represents 24.0 million 401(k) plan participants; the median account balance in 60s mong the 18.0 ets among all “n.” Indeed, less than 1 p www.ic All million 401(k) pa i.org/pdf/per14-03.pdf programs and so $105,663 c77.0% rticipants with account bala $120,541 und public policy and ercent www.ebri.org/pdf/bri of participants followed a “ $130,743 through objective 12.4% nces in th 19% $148,882 efspdf/EBRI_IB_12a-2008.pdf e EBRI/ICI 401(k) database at y resear 1/n” ch and $162,290 asset allocation strategy. The educati 10.6% the database was on. EBR $125,052 I is the only ear-end All 64.8% >3038.8% % 9.1% 27.6% 16.0% 7% 11.6% 9% 8% 5.7% 10%11.2% 9% 4.9% 8% 6.4% 7% 4.6% 8.6% 9% 8.6% 5.1% participant account balances at year-end 2008; the fourth looks at participants’ asset allocations, including analy 13% sis of 401(k) is introduced because the ten These cha declined 4.1 percentage points between 2007 nges >$40,000–$50,0 25 in participant account balanc Distribution of 401(k) Plans, Participants, and Assets, by Investment Options, 2008 00 23.8% ure of the “199es also reflect change 9–2008 consistent and 2008 12% 24% (Fig c25% 23% ure 20, lower panel). At year-end 2007, 70.9 group” has s in ass 12% et values during the nine-year grown longer, 25% and the a26% ge composition has gotten time period (Figure 8). percent of 25% 1% 1,000 participants, and these Plans Without Company Stock, GICs same plans acc /Stable-Value Funds P oe unt for 84 per rcentage of P cent of artic all plan assets. Because most of the plans hav ipants, 2008 e a small 100 0 The Institute seeks to advance the public’ 9% 8% s, 8% <0.5% only recently been establishe would not be included in the 10% d (80 percent of all 401(k) consistent group. Moreover, any time a 401( Russell 2000 Index -type plans in exis 4% tence in 2006 k) plan sponsor changed ser were established after 1989 vice providers, all 50s Distribution of Participants’ Compan 50s EBRI studies the worl 32.8% 56d of health and retirement ben 23.2% y Stock Allocations, b 13.5% efit ys — issue Age s such as 401(k)s, IRAs, retire 53.6% ment $12,655 at year-end 2008. d Availability participant age, tenure, salary, contributi Figure 12, T balanced funds, company stock; 1,001–2,500 enu and Use of 401(k) re Compositio >2-5n of Select Plan Loans b $28,990 1,576 ed 401(k) Accou on behavior, roll 7% $40,279 y 2,459,048 Plan Size novers from oth t Balanc $50,635 7% e Categories e$95,548,091,882 r plan$64,075 s, a .................................................... sset allocation, withdrawals, loan activ 2% $77,142 13%$38,856 $62,956 7% ............... ity, 18 no. 318 (Employee Benefit Research In All private, nonprof 84.5% stitute, June 2008). Available at 11% it, nonpartisan, Washington, DC-b 8.2% www.ebri ased organi .org/pdzat f/briefspdf/ebri_ib_06-20087.pdf ion com 7.3% mitted exclusively to Employee Benefit Research In each year from 1999 through stitute. “H 2008. These 2. istory of 401(k) Pla 1 million 401(k 22.7% ns: An Update. ) participants make up ” FACTS from a group of consistent participants (or a EBRI (February 2005). Available at PLANS WITHOUT COMPANY STOCK, GICs, Figure 47, Percentage of Eligible Particip update, see Holden and (an annual average growth rate of 11.4 percent; Figure 5). Van 9% Derhei (2004a a OR OTHER STABLE-VALUE FUNDS ants With 401(k) Loans, by Participant Age, nd 2004b). Tenure, Account Size, or Salary, more than 5,00 $40,000 in sala >$50,000–$60,0 ry in 2008, the 0 participants were offered company stock as 00 median account balance was 24% 24% 22% $50,707. an investme For longer-tenured p nt option in 2008. Thus, to an 2024% articipants in their 60s earnin 25% alyze the poten 6%24% tg more ial 2007 and Profit Sharing/ • After rising in 2 Account Size year- 401k Council of America (2009) end 2008. 003 and for the next four indicates that in 2008, the a consecutive years, the average verage n 401(k) umber retireme of investment nt account fell 24.3 percent in fund options available participants’ us 1–100 b e of lifecycle, or target-date, funds; a 42.3% 14.9%nd the fifth focuses on 7.5% 15.6% participants’ 40 16.5% 1(k) loan activity. significantly older compared with the cr Although asset participants held no bond fun allocation vari c ed with ag ds. At year oss-se e an -end 2008, 65.1 percent of participants conti d many p ctional snapshots of participants. articipants held a r 5% ange of investm The results nued ents, to hold no bon from the 1999 the impact o 5% d funds, b f–2008 consistent stock market ut 5.8 per- number of part 60s The 2003–2008 consistent group represents the 6.0 million 401(k) plan participants with account balances at the end of each ye incom icipants, the asset size for ma e adequacy, co 32.1% nsumer-drive ny plans is mo n benefits, Socia dest. About 22 percent of the 12.8% l Security, tax treatment of both retireme plans have ass ar from 2003 ets of $250,000 or 55.1% nt and health Table of Contents 21.3 >5–10 $27,535 $37,533 $46,961 $59,262 $70,201 $55,831 [tabulations of U.S. Department of La participants in the plan would be excluded fr Investment Options Offered by Plan Less Than $10,000 bor Form 5500 data om the consis >$40,000–$50,000 for 2006]), or (2 tent group. For the year-end 1 Plans ) the em Participants Sployee only recently joined the plan hare of 999 EBRI/ICI 401(k) database Part More Than $100,000 icipant's Account Assets Holden, Sarah, Jack VanDerhei, Age and Carol Quick. “401(k) Plan Asset Allocation public Pe poli rcentcage of y research Accoun Size of Account Balance and t Baedu lance I cation on nvested econ in B , Account Balances, and Loan Activity in 1998.” aolanced F mic securi unds ty and emplo 4%yee b 4%e4% nefit issues. and employer c $40,000 www.ebr and GICs 2,501–5,000 $10,000 i.org o and/or other stable- ntribution rates. This resear <100 participants /pdf/publications/facts/0205fact.a.pdf 713 100–500 ch report examin 2,488,013 501–1,000 es the relationship between $103,723,290,034 1,001–5,000 account balanc $41,689 es and particip >5,000 ants’ Participants’ allocations to c 80 Selected Years Consistent Group in 1999 ................................................................................................................. the media’ ompany stock s and policymaker EBRI/ICI 401(k) Database in 1999 remained in line s’ knowledge with previous years. Consistent Group in 2008 Forty-si EBRI/ICI 401(k) Database in 2008 x percent (or 11.0 million) ........................................... of the 46 20s longitudinal sample), which r 77.8% >$60,000–$70,0 40.2% 7.8% 00 emoves the ef 37.5% 30.5% fect of participa 23% 7.0% n24% 22% ts and pla 7.7% ns e 13.0% ntering 4.9% and lea23% 7.4% ving the data24% base. Initially, this 23% Fifty-nine percent of the 401( <$10,000 k) plans for wh 39% ich loan data were available in 39% 37% the 2008 35% EBRI/ICI 401(k) database offered 36% 39% a plan effect of plan si than $100,000, 101–500 through 2008; the median account balance among the consistent group was $43,700 at year-end 2008. the median ac ze, the remainicount balance ng panels of Fi 44.4% was $258,841. gure 13.3% 25 group plans by investment options and plan size. 6.8% 2006 18.6% 13.9% Figu for participant contributions was 18; Hewi re 13, Accou 2008. nt Balances Increase With tt Associates (200 Participant Age an 9) indicates an d Tenure ........................................................... average number of investment options of 18 in ...................18 22 0% Consistent Group in 2003 >10–20 $61,052 EBRI/ICI 401(k) Database in 2003 $73,844 $84,527 Consistent Group in 2008 $100,068 EBRI/ICI 401(k) Database in 2008 $112,393 $85,587 43 All 31.0% 12.9% 56.1% cent of participants held at lea group are pres performance s benefits, cost h ented in the ap owed through in 401(k) account manage pendix of this report. st some of their accounts in b ment, worker a s because nd 4 employe 01(k) plan part ond funds r attitude at ye icipants tend ar-end 2008 s, policy reform p ed to be heavily invested in eq when they ropo had sals, and p held no bond f ensuity ion asset unds at s The V less, and anoth anguard Gro er 32 percent h up. How America Saves 2 ave plan EBRI’s member asse009: A Report on Vang ts between $250 ship includes a ,001 and $1,25 cross-section of uard 2008 Defined Co 0,000 (Figure 2). pension funds; businesses; trade associations; Balance Hel ntribution Plan d in Company Data Stoc. Valley Forge, k See Figures A Investment Co c 1 and A2 in mpany In the stitute Perspective. appendix for the age a Vol. 9, no. 5 (Januar nd tenure distribution of the 2003–2 y 2000), and EBRI Issue 008 consistent group of Brief, no. 218 (February 2000). (whether on their own or through a update, see Holden and See Figure A1 Dec- value funds Jun- Equity, bond, money, and/or balanced funds Dec- Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. 4 in the appe Jun- Dec- Van Jun- Dndix for a detail erhei (2001a). Dec- u Jun- tomati 33.2% Dec-c enrollment). In Jun- ed presentation of the cha Dec- 5.3% Jun- Dec- either event, job tenure 29% 29,101 Jun-7.1% Dec- nJun- ging percenta Dec-7.1% 7,051,309 Jun- would not accurately reflect actual Dec- ges3.1% o Jun- f acco Dec-unt balance invested i Jun- $242,732,441,135 25.4% Dec- Jun- Dec- 15.5% Jun- n 401(k) bo Dec nd - 30s Introdu Gr77.9% 5,001–10,000 oup ction ................................................................................................................... >$70,000–$80,0 Z46.7% ero 1–10% 8.4% 00 29.7% 11–20%23.2% 402 5221–30% 26% 31–40% 6.5% Size of Account Balance 2,754,38323% 22% 41–50% 7.2% $132,004,861,661 14.4% 51–60% 4.8%22% 61–70% 7.8% .................................................. 71–80%23% $47,925 81–90%22% 91–100% 5 Among the consistent group, there was a wid The 1999–2008 consistent group represents the 2.1 million 401(k) plan participants with account balances at the end of each yea 20 e range of individual participant experience, often influence r from 1999 d by the relationship age, tenure, and salary. 401(k) particip $10,000–$20,00 ants in the 20 0 08 EBRI/ICI 401(k) database were 32% 32% in plans th 31% at offered company stock as 29% 30% an investme 33% nt option Age Group 501–1,000 Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. 43.7% >0–50 percent 11.8% 8.1% >50–90 percent 20.3% 13.1% >90 percent group was demographically similar to the entire EBRI/ICI loan provision to participants ( 0–2 >20–30 Figure 43). >2–5 $128,691 The loan feature w $147,324 >5–10 401(k) as more commonly associ databas $160,313 >10–2 e at year-end 1 $182,439 999. However, ated with large plans (as measure >20–3 $197,671 by year-end 20 $150,787 >30 08, d by a 1–100 43 101–250 251–500 501–1,000 1,001–2,500 2,501–5,000 5,001–10,000 >10,000 All Plans 58 Figure 48, 401(k) 2008. Deloitte 96 97 * Percentages do not add to 100 percent because of rounding. and fundi 97 Consulting LLP Loan Ba 98and under 98 ng. There is wi lanc 99 es , Internat 99 ................................................................................................ standing of employee benefits and labor un 00 ional Foundation, and the Internati cde 00spread ions; h 01 e 01 alth recog car 02 e prov nition that if employee be 02 iders and insur 03 03 04onal ers; 04Society of Certified Employee Benefit government org 05 n05 efits data exist, EBRI kno 06 anizations; 06....................................... 07 07 and service firms. 08 08ws it. 09 0946 PA: The Vanguard Group, Vanguard Center for Retirement Research (2009). Available at a Fidelity Investments. “Impact of Market Available at through 2008; the median account balance among the consistent group was $58,797 at year-end 2008. Of which: lifecycle www.ici.org/pdf/p funds an option er09-05.pdf Volatility on Particip and www.ebri.org/pdf/briefspdf/0200ib.pdf Salary Range ant Exchange Behavior.” Building Futures: I mpact of Market year-end 2007. securities. At year-end 2008, Conversely, only 1.7 percent of participants held no altogether, equity securities—equity fun 22,123 bond f ds, the equity portion of balanced unds at 5,597,630 year-end 2008 whe $191,009,728,327 funds, n they had and company held bond 40s Figure 14, 401(k) Account Bal participants compared with th Plans Without Company Stock, GICs, About the EBRI/ICI 74.0% Note: The EBRI/ICI 401(k) database contains 10.3 million 401(k) plan participants at year-end 1999 and 24.0 million at year-end >$80,000–$90,0 45.9% 401(k) Dat 9.9% 00 e age and a28.3% nces Less abase tenu 21.1% ............................................................................................. or Other Stable-Value Funds Than $10,000, by re distribu 23% 7.1% tion of the year-end 23% 21% Years of Tenure Particip 8.3% ant Age an 15.6% 2003 and d Te 6.0% nur21% year e............................................ 8.8% -end 2008 EBRI/ICI 401(k) 23% ................................ 21% 2008. ...........20 5 >10,000 Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. >$20,000–$30,000 380 28%Percentage of Account Balance Invested in Lifecycle Funds 11,575,551 28% 28% $587,290,238,333 25% >90% 36 26% $50,735 29% funds plan participation. • 20s The a among t 1001–5,000 20s verage 4 37. h8% e 18.0 million 401(k) particip 01(k) account balance moved 4.5% 5. 44.7% 1% 40.1% 4. ants with account ba 8% 11.7% up and down with stock market perfor 3.2% 8.4% 2. lances i 8% 13.7% n20.4% the EBRI/ICI 401(k) database 2.9% 11.3% 1.6% mance, but over the entire five-yea 1.5% 46.2% at year-end 20 1.4% 34.3% 07 and r $20,000 Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. >30 $171,417 About the EBRI/ICI 401(k) Database $188,257 16.7% $196,590 $217,459 $231,880 $179,573 57 among the three factors mentioned above: contributions, investment returns, and withdrawal and loan activity. Participants The ratio of participant accou (Figure 22). ANote: At year-end 2008, the average account balance among all 24.0 million 401(k) plan participants was $45,519; the median acc mong these participants, 72 percent held 20 nt balance to salary is positively correlated wi Number of Participants in Plan percent or less of their account balances in c th age and tenure. b Participants in their 60s— oount mpany stock, these participants had grown $0 older (Figure A6), accrued lon Number of Participants in Plan ger job tenures (Figure A7), and accumulated larger account the number of Note: Components may not add to 100 percent because of rounding. participants in the plan). Ninety-three percent of plans with more than 10,000 participants included a loan For statistics i https://instituti n Equity Funds dicating the higher propensity of withdraw onal.vanguard. 13.5 Company Stock com/iam/pdf/HAS09.pdf Balanced Funds als among participants in their 6 Bond Funds GICs and Other Stable- 0s, see Holden and VanDer Money Funds hei V olatility The consistent group consists of 2.1 million 401(k) plan participants with account balances at the end of each year from 1999 t . Boston, MA: Fidelity Investments, D 11.6ecember 2008. Available at hrough Specialists (2009) report that the average Note: Percentages do not add to 100 percent because of rounding. Job tenure is generally years working at current employer, and Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. >$90,000–$100, a 000 12.9 number of fu 22% nds offered by the 22% 21% 15.9% 606 401(k) pla20% n sponsors in their survey wa 22% thus may overstate 20% s 20 in 50s Age Group 70.3% Equity, bond, money, and/or balanced funds, Note: The EBRI/ICI 401(k) database contains 15.0 million 401(k) plan participants at year-end 2003 and 24.0 million at year-end 39.2% 11.3% 28.9% 21.0% 7.9% 10.0% 19.6% 6.5% 11.1% 2008. stock—represe EBRI/ICI 401(k Distribution of Equity funds at year-e Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. >$30,000–$40,00 n nd 2007. On n )ted close to 5 Database ....................................................................................................... F 0 und Allocations 6 et, the percentage of participants percent of th 23% e 1999–2008 c and Participant Exposure to Equities 24%onsistent holding no group of 401(k) plan participants’ 25% bond funds 22% declined to 66.8 23% .......................................... assets (Figure A11). percent at year 26% -end 5 >5,000 30sbalance was $12,655. 46.2% 47.7% 10.3% 9.0% 12.8% 21.0% 9.6% 39.5% Figure 49, Loan Balances as database. Age Group All All their importance to our nation’ Alla Percentage >0–50 percent $61,106 54,765 of 401(k) Account Balances for Participan $73,253 24,000,380 s economy >50–90 percent $83,441 $1,092,467,739,068 . $99,864 ts With Loans, by P $114,337 >90 percent $45,519 articipant Age, $86,513 time period increased at an average annual growth rate of 7.2 percent, attaining $86,51 >50–90% 3 at year-end 2008. year-end 2008. Comparison of Consistent Group of 30s 46. 4% 7.1% 6.7% 6.401(k) Pa 0% 3.5% rticipants to EBRI/ICI 401(k) Database 2.8% 2.6% 1. Value Funds 6% 1.4% 1.3% 20.6% Relationship of EBRI/IC who were you Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. nger or had fewI 401(k) Database Pl er years of tenure experien ans to the Universe of All 401(k) Plans ced the largest increases in average account balance between year- having Figure 15, 401(k) Account Bal 35 including 47 pe had mo years of participation in the 401(k) plan. 2008. Components may not add to 100 percent because of rounding. Note: The Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Participants re time to accumulate assets rcent who tenure variable is b held no a gnces Greater enerall ne ( y y Fears workin igure 33) —tend to have Than $100,000, by Partic g at current em . On the o ploy ther higher er, and thus ma hand, ratios, while those in their 20s ne ipant Age an y overstate arly 7 percent had years of particip d Tenure ation in the 401 mo ........................................ re than 80 had t (k) p he lowest ratios lan. percent of their (Figure ........20 Investment Co The EBRI/ICI Participant-Direc http://dcda.fid mpany I e 1996 lity.com nstitute. 1997 /static/dcle/WPSFidelityPe ted Retirement Quarterly Supplementary Data 1998 1999 Plan Dat 2000rspectives/documents/MV_partbeh a Collection Project is the larg 2001. Washington, DC: Investm 2002 2003 14.6% 2004est, most representative repository 2005 aent Company I vior_Final_121108 2006 2007 nstitute. _5.pdf 2008 of balances compared with the cross-section of participants provision, com Note: The The consistent group consists of 6.0 million 401(k) plan participants with account balances at the end of each year from 2003 ptared with 33 enure variable is generally years working at current employer, and thus may overstate years of participation in the percent of plans with 10 or fewer pa in the entire year rticipants. There is little variat -end 2008 database (Figures A3 and A8). ion in participant loan activ 401(k) plan. through 2008. ity 60s Relationship of Age and Tenure to EBRI delive 20s 59.4% >$100,000–$200 34.9%rs a stead 12.4 11.8% ,000 27.0% y stream of invaluable research and anal EBRI’s work advances knowledge and unders 42.2% 18.2% Account Bal 22% 23.8% 8.8%20% 19% ances 13.5% 8.5% 23.1% 14.1% 12.2%18% tanding of emplo ysis 13.7% 9.3%19% yee benefits and their 18% (2002). It is possible t and GICs 15hat these older longer-tenured workers accumu and/or other stable-value funds lated DC plan assets (e.g., possibly in a profit-sharing plan) 2008. >$40,000–$50,00 Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. 0 22% 21% 24,024 22% 5,916,952 20% 21% $229,842,664,062 24% So 20s uPercent Change in Total Return Index rces an All 40s d Type of Data....................................................................................................... 44.7% 21.1% 46.0% 11.9% 8.1% 12.1% 13.1% 19.8% 12.1% ...................................... 40.9% 66.8% 5 Ten Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. ure, Account Size, or Salary, Selected Years ...........................................................................................................47 The asset 2008. Between year-end 2007 allocation of participants in the and year-end consistent group 2008, on net, the pe varied with par rcentage tof participants al icipant age, a pattern that is locating 100 percent of their also observed in the The year-end 2 $0 a 008 EBRI/ICI 401(k) database finds that, on average, 37 percent of participant account balances were a 23 40s 50. (percentage of participants) 3% 7.8% 6.7% 6.2% 3.6% 2.8% 2.5% 1.5% 1.3% 1.2% 16.0% 44 end 2003 and >$200,000 18% year-end 2008. c For example, the averag importance to the nation’s econo e account ba Investment Category15% 40s my lance of participants in their 20s ros among policy13% 13% makers, the news 13% media, and e 306.2 percen12% the public. It t (a All17). In addition, for any give About 2 in 5, or 6.0 million account balanc 30s 75.0% The analysis is based on a sample of 6.0 million participants with account balances at the end of each year from 2003 through 43.0% es invested in 9.3% , of n age a company stock. the 401(k) par 29.7%nd tenu 52.7% 22.4% re combination ticipants with 14.6% 7.3% accounts at the end of 2003 in , the ratio of account ba 8.2% 7.2% 16.6% 15.0% 5.7% lance t 9.3% o 8.1% the EBRI/ICI 401(k) database salary varies somewhat with 2008. had The 2008 information about individual 401( EBRI/ICI 401(k) database is a repr >$50,000–$60,00 Of which: lifecycle EBRI publications 0 funds an option k) plan part inclu 19% de in-de icipant accounts. As of December esentative sam pth cove 19% ple rage of key issues a of the estimated universe 20% 31, 2008, the database 18% nd tren of 401(k) plans. At year-end 2008, ds; summ 19% in arie cluded statistical s of rese 21% arch by plan size (Figure 44). Loan See Figures A 50s 4 and A5 in the ratios vary only slightly when appendix for a 43.3% sset allocation participants are grouped bas information for the 2003–2008 17,955 13.3% 4,255,714 ed on the size consistent group of participants. $163,209,208,715 43.4% of their 401(k) plans 30 Figure 16, Med prior to the intr Participants in • 30s The median Note: The median account balance at year-end 2008 was $12,655. Plans With GICs ioduction of 401(k) plan an Account Balance Among Long-T their 20s hold approximately 2 percent of th (mid-point) 401(k) account balance increased /Stable-Value Funds 28.5%features. However, enured Participants, by generally such e total assets in the 2008 EB at an a 13.4% verage Age and DC plan arra annuSa al growth rate of 11.4 percent over the lary, 2008 ngements did not permit employee RI/ICI 401(k) database; participants ..................................... 58.1% .....21 Investment Options ...................................................................................................................................................... 6 58 b There is a positive correlation between age and account ba 8.4lance among participants covered by the 2008 database. cross-sectional 9 account balance to EBRI/ICI 401(k bond funds increased fro ) database. Yom unger participa 1.9 percent to 2.9 percent of participants. nts generally tended to favor equity funds, while older participants ________. “ICI 401(k) Participant Activity Stu ________. “Par Agd e and tenure ticipants Continue to Stay th groups are based on participant a e Course Amidst Market Downtu dy Shows 2008 ge and tenure at year-end 2008. Activity in Line 7.5 rn; Impr with Hist oveme orical Data.” News release (March nts Seen in Worker Engageme 9, nt, allo At year-end 2 cated to equity funds 008, 57 percen 2003 (Figure 21) t of balanced does this b . Ho 2004 wever, individual mutual fu y conducting nd as 2005 asset allocation 21sets and p were invested in equities (see Investme ublishing policy re s varied 2006 11.2% widely across particip search, analysis, 2007 and ants. For example, nt Company In special reports on 2008 stitute, 40s 1999 2000 2001 51.0% 2002 11.6%2003 7.9% 2004 16.7% 2005 9.5% 2006 2007 2008 Figure 50, Loans From 401(k) The 1999 The ass et allocation path that –2008 consistent group’s account b Plans Te the lifecycle fund follows to nd tobalances highli be Small............................................................................ ght the a become more c ccumulation effect of ongoing 401(k) participation onservative over time is typically referred to as th ............................ 14 . At year- 47 e PLANS WITH GICs 32.4 percent a 50s What we do >$60,000–$70,00 Salary Ran 52. nnual a AND/OR OTHER STABLE-VALUE FUNDS 3% ge verage 8.1% 0 growth rate) b 6.4% 16% etween the en 6.0% 3. 17% 7%d of 2003 and 2.9% 18% the end of 200 2.5% 16% 1.5% 8 (Figures 6 and 1. 17% 3% 7). Because younger 1.2% 19% 14.2% salary. For example, among participants in accounts at the 60s end of each S&P 500 findings and year from 2003 policy develo 39.5% their 20s, the ratio tends to inc through 2008. pments; timel These 6.0 million 401(k) participants make u y factsheet 12.6% s rease slig 6.4on hot topics; htly with salary for low regular up 47.9% dates on legi p a group of -to-moderat slat e sala ive and ry information about: 40s Equity, bond, money, and/or balanced funds, 28.1% 13.6% 58.4% (as measured all 401(k) plans held a total of $2.3 tril 1–100by the number of plan partic 38.8% lion in assets, and the ipants). Among participants in plans with 1.3% 20.3% database repr 7.1% esents about 4 100 o 10.3%7 r fewer participants, the loan r percent of th 21.8% at total. The atio Distribution of Plans, Particip 2003–2008 per $25,000 iod to $43,700 ants, and Assets at year-end 20 by Plan 08. Size.............................................................................................. 6 24 in their 30s hold 11 percent; p contributions and often were designed to articipants in their 40s hold be supplemental 2to other employer plans. 9 percent; participants in their 50s hold 41 p These participants’ acco ercent; and unt balances that 2009a). Available at EBRI’ www.i s mission is to contribute to, to ci.org/policy/retirement/retirement/09_news_recordkeeping Examinatio Account Diversification and Company n of the age composition of account balances Stock Usage.” News release, January finds that 52 percent of participants with account balances of 28, 2009. Available at less 60 % employee benefits issues; holding educational briefings for EBRI members, congressional and were more likely to invest in fi Figure 17, Ratio of 401(k) Acc The distribution of account b 50s o xed-income se a unt Balance lances across the 2003–2008 42.5% to Salary, by Partic curities such as 11.5% bo consistent group also high ipant Age an nd funds, 8.6% GId Tenure Cs and o 21.0% ............................................ ther s lights their higher 12.8% table- 9.3% value funds, accumulations. At or mo............... ney funds.21 20s abo Quarterly Supp ut 41 perce 73.4% 100 >$70,000–$80,00 $40,000 or le 35.2% 10 lementary Data nt of participants held no 7.3% ss 0 ). 40.4% 15.3% equi 16%ty funds, 18% 25.1% while 15%17% nearly 16 perc 3.9% 16% 13% 6.6% ent of participants held more than 80 2.9% 15% 19% 2.8% 20% 16% 9.1% 11.9% 19% 18%percent of “glide path.” Since discussions of asset allo Endnotes 50s All regulatory development 26.7% 43.9% cation usually focus on the perc s; comprehensive refere 13.4% nce resou 13.3% entage of rces o the p n benefit pro ortfolio invested in equities, the 42.8% grams an 59.9% d wo 15 rkforce end 2008, 22 p 60s 101–500 and company stock 57.ercent of the consistent group had more tha 4% 7.4% c 5. 40.1% 6% 5.4% 3.8% 3.2% n15.5% $200,000 in t 698 2.6% 8.0% h 2.eir 401(k) accounts at 3% 3,988,551 1. 6.5% 3% 1.1% 24.2% their current employers, $195,334,039,667 1.1% 12.7% participants’ account balances tended to be small (Figure 6), contributions produced significant account balance growth. In consistent participants (or a lo groups (Figure 18). However, at high salary Russell 2000 Indexngitudinal sample), which re levels the ratio tends to decline somewhat. A moves the effect of participants and plans similar pattern occurs among entering and leaving the database also c Relationship of EBRI/ICI 401(k) Database overs 48 percent of the unive rse of active Plans to the Universe 401(k) plan participants and 1 Figure 7 Median of All 401(k) Plans............................................. 2 percent of all 401(k) plans. 8.1% ............. The 6 Figure A1, Age Distribution was 20 percent of the remaini of 2003–2008 Co ng assets, whilnsiste e in plans with nt Group more than 500 .................................................................... participants, the loan ratio was 16 percent (Figure 7.9% .........................50 Asse participants in their 60s hold the rema pre-date the 401(k) plan are http://content.members.fidelity.com/In t Allocation of Recentl not included in this y Hired federal agen ining 17 percent of the total assets. side_Fidelity/fullStory Participants cyanalysis, staff, and th which focuses on e news /1,,7669,00.html media; and sponsoring public opinion survey 401(k) balance amounts. s on employee In sum, the EB 60s RI/ICI 401(k) database does a 34.5% not contain infor 10.7% mation on participant tr 8.3% 25.3% ansaction activity but can be used to 17.1% 5.5 than $10,000 >$40,000–$60,0 were in their 20s or 30s (Figure 11). Similarly, 62 000 14% 20% 14%23% percent of participants with 15% 21% 14% 26% account balances greater t 28% 14% 27% 16% han 30s 73.5% >$80,000–$90,00 41.2% 8.1% 34.0% 12.1% 22.0% 4.1% 6.9% 2.8% 3.5% 7.9% 11.5% year-end 2008, 60s 501–1,000 Of which: lifecycle 10 percent of the consistent group had mor funds an option 40.4% 25.7% 5.0% e14.1% than $2012.7% 0,000 in their 401(k 7.7% 4.2%) accounts at their current 25.6% 61.6% their balances in equity f issue encour sunds ; and major survey age (Figures 26 an , and to enhance the development 37 d 27) s of. pu Furthermo blic attitudes. re, 513 the percentage o 2,476,573 f participants holding no $132,472,692,442 equity funds varied d EBRI/ICI glide path generally reflects the declining while another 22 percent had 59 • 24.0 million 401(k) plan participants, in between $100 percentage of eq ,000 and $200, uities in the portfolio as 000 (Figure A3 47.3% ). In contrast, in the broa it approaches and pa a der database, 5 pe sses the targetrcent of date, Figure 18, Ratio of 401(k) Acc ________. “Th contrast, the average account 50 All 49. e U.S. Retirem 2% c 7.2% ent Market, First Quarter 200 balance of older participants or ount Balance to Sa 6.3% 5.8%lary for Participants in 3.5%9.” Investment those with longer tenures 2.8% Their 20s, 2007 Company Insti 2.5% by Te 1.5% nure tshowed more modest growth ute Fundamentals. .................................. 1.3% 1.2% Vol. 18, n 18. ............. (Figure 7% o. 5-Q1 22 database. This TH participants in their 60s (Figure 19). E B The Typical 401(k) ULK OF 401(K) ASSETS CONTI group is similar with respect to age and ten Percent Change in Average Account Balances Among 401(k) Participants Plan Participan benefit issues. t ............................................................................................ NUED TO BE EBRI’s Ed INVESTED ure uccomposition to the entire database at y ation and Re IN STOCKS. se ar On average, ch Fund (EBRI-ERF) performs at year-end 20 .................................... ear08, 56 percent -end 2003. By year- the charitable of , 6 80 Barclays Capital U.S. Aggregate Bond Index Changes in All or Nothing 401(k) Plan Participant Asset Allocation, by Investment Category, 4.5 2007–2008 45). distribution of For an analysi assets, participants, and s of contribution activity durin plans in the datab g the bear mar ase for 2008 is similar to ket of 2000–2002 using the cr that reported for the universe of pla oss-sectional EBRI/ICI 401(k) ns as 40s Among individu analyze t Plans With GICs 69.0% he ye >$90,000–$100,00 >$60,000–$80,0 ar-end asset allocations of the 40.6% al 401(k) participants in the and/or Other Stable-Value Funds 9.4% 00 0 31.3% 9.8% 13% consistent group, the allocation consistent grou 18% 21.5% 13%23% p of participants with accounts at year-end 5.0% 13% 20% 6.9% of acco 3.4% 13% 24% unt balances to equities varied widely 4.1% 24% 13% 9.5% 2007 and 14.8% 24% 15% year-end By Tenure Figure A2, Tenure Distribution $100,000 were in their 50s or 60s. The positive correlation Comparing sna 45 36 All 1,001–5,000 pshots of newly hired 401(k) of 2003–2008 38.8% 25.7% plan participan Consiste 6.8% nt Grou ts’ asset allocations prov be 13.0% p tween age a ................................................................ 13.0% 8.3% nd account bal ides further insight i 3.5% ance is expected because you 25.8%n61.4% to the recent ....................... nger 50 1 EBRI meetings present and explore issues with thought leaders from all sectors. employers, while another 16 p AEquity, bond, money, and/or balanced funds, ge Group ercent had bet c >0–50 percen ween $100,000 t Figure 2 and $200,000 >50–90 percen a(see Figure A3 in the appen t >90 percen 4.0dix). In contrast, in the t4.3b with age, with 55 percent of p The ratio of 4 See end (August 2009b note 9 for additional detail on lifecycle funds. 01(k) account balance (a ). Available at articipants in their 20s, 37 pe www.icit the .org/pd current employer) to salary alone 11.1 f/retmrkt_update.pdf rcent of partici pants in their 40s, is not an indicator of preparedness for and 45 percent of participants in Ch Gustman, Alan For data on 401(k) plan asset anges in 401(k) Particip L., and Thoma Percentage of participants ants’ s Steinmeier. “How Changes in Accou s, participants, educa nt Balances tional, and and plans t ............................................................................... scientif hic func rough 2006, see Social Security Affect Recent tions of the Instit U.S. Department $19,926 ute. EBRI Retirement Trends.” -ERF of Labor, Employee Benefits is a tax-ex .............................. empt organization NBER Working 10 which is usually indicated in t participants haPresent From Year-End 2003 Through Year-End 2008, d accounts with more than $ he fund’s name 200,000, and . The target da 8 percent had a te generally is the date at whic ccounts between $100,000 a by Participant Age and Tenure h the typical investor for who nd $200,000 (Figures A3 m that 401(k) particip 7). For example, the average ants’ assets weaccount bala re invested in e 10.3 10.3 nce of participants in their 60s in quity securities through equitycrea funds, the eq sed 18.3 pu ercent (a 3.4 percent ann ity cportion of balanced fuu nds, al and end 2008, thes 20s >$80,000–$100, e participants h of sound employee benefit pr 000 ad a minimum 38.0%tenure of five y 17% 10.8% ogr 21% ears ams and 21.4% and were 17% slightly older in age composition when compared 6.7% 22% 3.4% 21% 16.1% 20% 50s estimated by Cerulli Associate $70,000 63.6% >$100,000–$200,00 34.7% 5 10.2% 0s30.6% (Figure 3). b 8.7% 10% 21.9% 9% 5.9% 10% 7.5% 4.6% 9% 5.2% 10% 11.9% 20.3% 11% database, see Holden and VanDerhei (2004c). The analysis finds that overall 401(k) participants’ contribution rates were little Figure 19, Ratio of 401(k) Acc • Ag 54,765 employer-sponsored e >5,000 8.9 ount Balance to Sa 39.8% 401(k) plans, holding Percentage of 5.5% lary for Participants in (Median Tenure: 7 Years) Account B 10.1% alance Invest Their 60s, 8.6% ed in Lifeby Te cycle F 4.4% nure unds.................................. 26.0% .............22 around the a 2008. The anval eysis suggests t rage of 56 perc hent for the 199 at there is no evidence of a s 9–2008 consistent group ignificant shift as a by a large perc whole. Thirty-s entage of parti even percent o cipants away fr f participants in the om 40 and company stock, and GICs 20s 60 EBRI regularly provides and/or 36.3% congression 8.3al testimony 8.4 14.7% , and briefs policymakers, mem 49.0%ber organizations, workers are likely to have lower incomes and to have had less ti investment allocation activity of plan participants. Balanced funds, me to accumulate a balance wi which in 8. clude li 2 festyle and lifecycle fun $19,398 th their current employer. In ds, have increased in supported by contributions and grants. broader EBRI/I Paper. No. 14105 (June 2008). CI 401(k) database, 5 percen b 401(k) Plan Characteristics, by Plan Assets, 2008 b t of participanFigure A7 ts had accounts with more than $200,000, and 8 percent had their 60s holding no equity f Comparison of Consistent Group of 401(k) unds. The perce Percentage of Account Balance Invested in Non-Lifecycle Balanced Funds ntage of 401(k Participants to E 22 ) partic BRI/ICI 401(k) ipants holding no equity fund Database .............................................. s also varied with tenure, with ....... 10 Figure A3, Distribution of 401(k) Account retirement. A complete analysis of preparedness for retirement Security Admin istration (2008a, 2008b, and Bal2008c). For total retirement assets, includ ances, by Size of Account would require estimating projected balances at retirement by Balance................................................. ing those in 401(k) plans, through the ..................51 fund is design and 10). 30s$20,000 Age Group >$100,000 ed would reach retirement age and sto Tenure (years) 2003–2004 48.4% 14% 2004–2005 6.7% p maki Figure 44 Figur Figure A2 16% ng new invest e 46 2005–2006 14.2% 13% ments in the f 2006–2007 7.4% 16% und. 3.7% 2007–2008 14% 14.7% 2003–2008 14% 60s In the 13 46 average growth rate) between year-end 20 33.4% 52.7% years >$200,000 29.7% that the database has be 11.2% 27.4% 6.4% en tr 5% 03 and ye acking loan ac 20.9% ar-end 5% 2008. tivity among 40 6.8% Investm 5% 8.1% ent returns, rat 1(k) plan part 7.2% 4% 7.1% icipants, there has been little her than ann 5% 19.2% ual 26.4% contributions, 5% company stock. Forty- with the year-end 2008 cross-sectional database. All one percent was in fixed-income sec 39.8% 5.3% In addition, the 2003–20 uri 12.6% ties such as stable- 8.3% 08 consistent group’s account value investments and 4.9% 25.5% bond and mon balances tende ey d to 90% Figure 11 5.7 Group30sZero 1–10% 11–20% 40.9% 21–30% 31–40% Figure 15 41–50% 12.6% 51–60% 61–70% 71–80%46.5% 81–90% 91–100% changed in 2 For year-end 2007 data, see 000, 2001, and 2 and the medi 002 when compared with 199 Holden, Va a on employe nDerhei, Alonso, a r benefits. Figure 19 9. Whet nd Copeland (2008). her measured in dollar amounts or percentage of salary 4.8$18,986 84.7%$18,942 1999–2008 con their year-end Morningstar. other stable-value funds Ibbotson SBBI 2009 Classic Yearbook: Market Resu 2007 asset allocations. sistent group h 2007 ad more than 8 2008 0 percent of their 942 accounts invested in equities, while 11 percent held no lts for Stocks, Bonds, Bills, 7,043,568 and Inflation 1926–2008 $424,558,594,204. Chicago, sound public policy through objective addition, they are less likely to have rollovers from a prev popularity among 401(k) participants. More recently hired p ious emplo articipants held balanced f yer’s plan in their cu und rrent plan acco s: 60 percent of recently hired 3.9 unts. 82.7% 3.8 Figure 20, Asset Allocati Age Group Factors That Affect 401(k) Pa 40s 20s 28.6% on of 401(k) Pa All >0–50 percent 1999–2008 rticipants’ Acco 81.0% rticip 46.5% Consistent Group Had Longer Tenure Than ants unt Bala ............................................................................. 5.3% 48.9% nces 28.7% ...................................................................... >50–90 percent 12.6% 42.4% 30.1% 7.7% 4.1% -18.6% .................................. >90 percent 19.3% 306.2% ....................... 13 24 Allaccounts between $100,000 69.7% Source: 37.6% Tabulations 7.9% from EBR Median and $200,000 ( 32.2% I/ICI Partici 10.3% pant-Dire Figures 10 and cted R21.9% etirement Pla A3). n Dat 5.0% a Collection Proj 7.1% ect. 3.5% 4.4% 10.1% 16.2% also considerin the lowest and highest tenure • $1.092 trillion in assets. 40 g retirement income from Soc groups being a mo ial Security, de re likely not to be invested in equity fined benefit pl $17,909 ans, IRAs, and funds. The percent other DC plans age of participants , possibly from first quarter of 2009, see Inve Total Plan Assets stment Company Institute (2 Few 401(k) Participants Had Outstanding 401(k) Loans; Tenure Distributon of 2003–2008 Consistent Group Percentage of Eligible 401(k) Plan Participants Total Plans Total Participants 009b). For a discussion of trends between d Total Assets Average Account Balance efined benefit (DB) and variation. On average, less th Year-End 2008 30 Salary Range Snapshot of an one-fifth 401(k) Asset Allocation of 401(k) participants with access to loans had a loan outstanding, and, on average, market funds. generally acco Plans With Company Stock 40s unt for most of the change in 40.1% accounts with larger balances. 12.9% In addition, participants in their 60s tend to have $57,933 47.0% a 10 be higher compared with acco Of which: lifecycle Age Composition of Selected 401(k) Account Balance Categories unt balances funds an option in the cross-sectional database at year-end 2008. Nevertheless, with respect to Figure A4, Average Asset Allocation of 401(k) Account IL: Morningstar 401(k) Account Balances Greater Than $100,000, by Participant Age and Tenure EB Inc., 2009. RI issues press releases on ne s of 2003–2008 Consistent Group, wsworthy developm 720 ents, and i 5,046,863 by Partic s among the mo ipant Age $306,969,178,014 ....................... st widely quoted ..51 contributed, on Hewitt Associat $60,000 20s 57. Ratio of 401(k) Account Balance to Salary for Participants in Their 60s, by Tenure average, 401( es. 3%How We 2.6% ll Ak) participants re Employees Saving in 401(k) 2.4% 2. ’ contribution b 3% 1.4%ehavior does n Plans: 1.5% 2009 Hewitt Universe o1. t appear to 6% 1. ha 1%ve been materi Benchmarks 1.1% . Li ally affected by 1. nco 2% lnshire, 27. IL: 4% the equities at all in 2008 (Figure 47 Lifestyle funds 50s 80% maintain a pre >2-5A12). determined risk level and ge EBRI Issue B 253.5% 37.6% riefs 5.1% 83.1% are period nerally use words such as “conservative,” “mo icals providing exp 12.3% 55.1% 36.4% 8.6% ert evaluati5.0% ons of emplo -17.9% 27.3% yee benefit issues and 1023.5% derate,” or The T 20sypical 401( Median Note: The ten k) Plan Participant ure variable is generall 47.9% y years working75.5% at current employer, and thus 9.9% may overstate years of participation in the 401(k) pl 42.2% an. Year-End 2008 Snaps participants in 2008 held bala d 0 hot of 401(k) nced fund Participants’ A s, compared with 53 pe ccount Balances rcent of recently hired pa ................................................................ rticipants in 2007, 33 percent ..................... of 15 All Participants in EBRI/ICI 401(k) Database at Year-End 2008 >30 Years 75.4% Figure 17 74.6% PLANS WITH COMPANY STOCK Reflecting their higher aver Lifecycle funds have been ag incr e age and easingly used 25 tenure, the 1999–2 as the defaul008 t investment in automatic enro consistent group also had 73.6% median and llment plans a avnerage account d in plans’ holding no $0–$250,000 22.4% equity funds $40,000 or less resear 21.0% tends Percentage of participants by years of tenure, year-end 2003 and year-end 2008 21.3% ch and education. to fall as salary With 401(k) Plan Loans, by Plan Size, 2008 12,202 17% increases ( 138,324 19% Figure 27). 18%$1,230,472,046 18% 17% $8,89621% previous employment. For references to such research, see 25 1–100 50s 36.3% Loans Tended to be Small, 1996–2008 38.1% 8.1% Holden and Va 3.7% 13.0% 11.5% nDerhei (2005) 15.6%. For an analysi 48.8% s of the possible 18.5% defined contribution (DC) plans, see Poterba, Venti, and Wise (2007), and Holden, Brady, and Hadley (2006). over the past 1 Figure 21, Average Asset Allocation of higher propens Hewitt Associates LLC, 2009. i3 years, about ty to make withdrawals. sources on14 percent of the remaining employee be 401(k) Accounts, by nefits by all media. Figure A4 aParticipan ccount balance was taken o t Age..................................................... ut as a loan (Figure 46).................... . Not all 26 average ass Allet allocation at ye Percentage of participants with account balances in specified ranges, 2008 >5–10 ar-end 2008, the 2003–200 70.9% 77.8% 47.2%8 consistent 54,765 41.9% group had similar a 29.8% 24,000,380 sset allocation -18.4% $1,092,467,739,069 by participant 293.2% age as As tends to occur when the st For statistics i 20 Percentage of participants with account balances greater than $100,000 at year-end 2008 ndicating the higher propensity of withdraw ock market contracts in value, the percentag als among participants in their 6 e of 401(k) assets invested in 0s, see Holden and VanDer equities fell in 2008. hei There is also a The 2008 30s 60s data 66. base covered 4 positive corre 0% 4.1% lation 8 percent of th 3.between account balance and ten 2% trends, as well 30.2% 2. e universe of a 8% as cr 4.4% Percentage, 2008 itical analy 1.7% ctive 401(k) plan participants, 12 percent of s1. es of 11.4% 5%uemplo re am 18.3% 1. y ong participants represented 5% ee benefit po 9.2%1.0% licies an 6.3% 18.4% 1. d proposals. 0% 35.1% plans, and 47 by the 2008 1.0% EB Cerulli RI Notes 16.2% percent is a bear market in 30s equities from 2000 through 20 56.6% 02. 10.5% 0–2 Years 32.9% “aggressive” in their name to indicate the Our (Mid-point) fund’s risk level. Lifestyle funds generally are included in the non-lifecycle balanced 20 Definition of 401(k) 1998 Account Percenta 1999 Balance ge of p 20 artici ........................................................................................... 00 pants, b 2001y years of tenure, 2002 2003 year-end 1999 and 2004 2005 year-end 2008 2006 2007 ................................ 2008 15 20s recent hires in Figure A5, Asset Allocati 51.8% >$40,000–$60,00 39.0% 2002, and 29 p 6.1% on to Equities Varied Widely 0 ercent of recent hires in 1998 30.4% 23.2% 17% Among Participants in the 7.2% 16% (Figure 34). At 5.0% 16%10.8% year-end 2008, 2003–2008 Consiste 5.4% 16% 6.5% 44 percent of 15%nt Group recently hired 401(k) ..................... 19% 29.5% ..52 11.5% 60s Ratio of 401(k) Account Balance to Salary, by Age and Tenure 66.8%36.4% 12.8% 50.8% 15.8% balances that The datab Asset Allocation and Participant A 101–500 ase i 70% were much hig n100% cludes 401(k) participants across a wide range of her than t a 37.4% he mg edian and e 9.8% average a 5.3% ccount ba age and15.1% tenure. Fifty-three percent of participants were in lances of the b 17.9% roader database (Figure A8). 12.6% At year- investment line Poterba, James, Steven F. Ven >$250,000–$625,000 ups (see Profit Sharing/401k ti, and David A. 9,119 $15,246 Co Wise. “Rise of uncil of America, 209,235 401(k) Plans, Lifetime Earnings 2009). At year-end 2008, $3,843,726,220 $49,777 15.8%68 percent of lifecycle mutual , and Wealth $18,370 at Retirement.” fund impact of automatic increases in particip THREE-QUARTERS O 30s F 401(K) PLANS All 38.0% Iants’ contribution rates in NCLUDED 23 L 26.8% IFECYCLE FUNDS 29.9% automatic enro IN THE21.7% IR llment plans, INVESTMENT L -25.4% see Va INE nD UP AT YEAR-END erhei and Co 106.5% peland 50% EBRI directs members and other constituencies to the information they need, and unde15.0% rtakes new participants ha 400% Of which: lifecycle ve access to 401(k) plan funds an option Average Asset Allocation of 401(k) Accounts of monthly loans—factoring in all 401(k) participants periodical providing cu 41,311rrent information on a variety 17,376,780 with and without loan access in the of employ $793,660,807,499 ee benefit topics. 2 Plans With Company Stoc 40s k 57.6% Percentage of eligible 401(k) participants with outstanding 401(k) loans 11.1% 31.3% The growth pat At year-end 20 participants in the entire year 08, 37 percent tern of the 199 -end 2008 data of 401(k) plan participants’ ac 9–2008 consistent group’s a 6% base. ve co rage unt balances account b were invested alances reflects stock market performance over in equity funds, on average, (2002). 11.6% Tenure of Participant (years) 30s database. A participant’s tenure with an em of 401(k) plan assets. The EBRI/ICI project is unique beca 40s 56.0% 70. So 45.8% urce: Tabul 9% 6.6% 4. ati 3% ons from E 22.1% 3. B0% R >20–30 Years I/ICI P 14.8% artip 2. clioyer serves as pant-Di 6% rected Reti 7.3% 1.6%ureme s a proxy for the length of e it includes data provided b nt P 1. 5.3% 4% lan Data Co 12.4% 1. ll3% ection P 5.2% roject. time a worker has 0.9% 7.2% y a wide variet 0.9% participated in the y of plan 0.8% 12. 24.6% 4% 10.6% Figure 22, Distribution of 401(k) Prior to 2005, Size of 401(k) >$60,000–$80,00 the U.S. Department of La Account Ba 0 lances Plans, Participants, and Ass ................................................................................................ 15% bor private pension plan b Tenure of Participant (years) 13% ets, by Invest u 10.9% 14% lletin updates ment Option 13% reported a count of a s, 2008................................. 12% .................................. ctive 401(k) plan 17% ............15 26 fund catego $50,000 Allry. 38.8% 10.3% 10% 13.3% 47.9% NBER Working 501–1,000 0 Paper. No. 13091 (May 200 35.8% 7d 7.8% ). Percentage, 2008 Figure 48 3.8% 15.5% 13.7% 20.6% participants held lifecycle fund Holden, Sarah, Peter Brady, a Participants with no $15,000 equity f >2-5 un ns, d balances ma d Michael Had while almo 119.5% st o y still have ex ley. “401(k) Plans: A 25-Year Retrospective.” ne-fifth held 58.1% posure to the stock market thro no 5% n-lifecycle funds, 46.0% and 2 per 30.6% cugh co Investment Co ent held bo -21.3% mpany th lifecycle and n sto mpany I 420.7% ck or balanced nstitute on- 44 their 30s or 40s, while 13 percent of participants were in th >$625,000–$1,250,000 9.7% 8.7% 8,345 8.4% 326,741 eir 20s and 9 p $7,538,513,942 ercent were in their 60s (Figure 4). The median age $23,072 end 2008, the assets were held in DC plans ( average 401(k) research on a account balan see Investment n ongoi EBRI’s ng ba Pcee of the 1999 Company Insti nsion Inv sis. estme –2008 nt Re tute, 2009b). port consistent group was $ 53provides detailed fina104,734 (Figure A8), more than ncial information on the universe of These cha 2008.20s At year-end 2008, near nges in participant account balanc ly 7 percent of 39.2% es also reflect change the assets in th 14.5% e EBRI 8.9% s in /ICI 401(k) database were invested in asset values during the fi 11.6% 7.7% ve-year time period (F lifecycle funds 16.4% igure 8). and (2008). For a d Figure A6, 1999–2008 Consistent Group Was Older Than As in previous 50s years, the data iscussion of the variety of fact base for year-e 57.6% nd 2008 fi ors (e.g., taxes nds t All Partic h , at savings, mortgages, children) th participant ipants in EBRI/ICI 401(k) Database 11.6%s’ asset allocation varied considerably with ag 4.9% at impact replacement rates, s at Year-End 2008 7.0% 30.8% .......53 e. ee 10 publications 31 2003–2008 Consistent Group, by Participant Age database, only 250% 60% No16 percent had te: The analysis incl a loan outstan udes 401(k) plan parti ding at year-en cipan $13,493 ts with two or fe d 2008. wer years of ten U.S. Department of Labor data indicate that loan ure i Percentage of n the year indicated and i 17% n a plan offering$43,700 40s 54.4% 43.2% 8.2% 20.2% Loan as a percentage of the remaining 401(k) account balance 13.0% 7.1% 6.5% 13.7% 6.4% 9.2% 5.5% 22.6% 11.4% the nine-year ti compared with 48 percent at >$80,000–$100,00 me period. The three-year bea 0year-end 2007 14% 0–2 and 40 perce r market >2–5 12% of 20 >5–10 nt at 00–2002 pulled year-end 20 >10–20 12% >20–30 02 (Figure 20, top panel). Altogether, equity 401(k) account balances down. Diversified 11% >30 11% 50s 14% 5.2% 401(k) plan. recordkeepers and, therefore, portrays the a Relation 1,001–5,000 ship of Age an In90% deed, 62 percent of participants with account balances d >5–10 Tenure to Acco 38.9% 49.2% uncttivity of part B7.1% alanc 33.1% es ............................................................................. icipants in 401(k) 5.5%54.0% 33.6% of les 18.6% plans of varyi 4.3% Age Group s than $10,000 24.3%10.8% ng sizes—from very large had five or fe -24.0% 150.5% wer years of tenure, ....................... 16.0% 4.6%15 26 50s 73.4% 4.4% 2. $13,038 7% 0–2 2.4% >2–5 1.5% >5–10 1. >10–20 3% >20–30 1.2% 4.6% >30 0.8% 0.8% 0.8% 10.8% participants that had bee Perspective. 20% Vol. 12, no. 2 (N n adjusted from the number of acti ovember 2006). Available at 11% ve www.i participants 4.1% ci.org/pdf/ that was actual per12-02.pdf ly reported in the Form 5500 f 20% ilings EBRI has earned widespread regard as 18% 4.3% lifecycle balanced funds funds, which include lifecycle funds. Indeed, 30s >$1,250,000–$2,500,000 45% (Figure 35). All of th defined b 45.7% 7,617 2.5% e increase in b 70 percent of p enefit, defined 401(k) Loan Balances 7.0% 536,364 $12,810 Figure 13 a contri a larticipants with no nced fu bu 6.2% tion, nd u and 401( 2008 $13,599,899,951 se amo equity fu 12.6% k) plans. EBRI ng recend ntly hired parti 7.3% s had inve Fundamentals of Employee stments in either $25,356 cipants between year- 19.0% Figure 23, Average Asset Allocation of Accou 11 At year-end 2 008, 57 percen EBRI maintains an t of balanced d analy n mutual fu tsz, by Participant Age an es the mo nd asst comp sets were invested in equities (see Investme red Investment hensive databa a Options se of 401(k) ..................................... -type nt Company In prog $12,655 rams.......... in the stitute, 27 double the ave of the participants in the 2008 60s 350% com rage account b pany stock as an i a database is 44 nlance of $45,5 vestment o 55.4%ption. 19 among parti years, the same cipan as in 2007. ts in the e 11.4% 52.2% In 2008, 38 p ntire database 2.4%ercent of the p (Figure 9). The median 401(k) articipants had 33.2% five or Although asset allocation vari <100 participants ed with age an 100–500 d many pa$40,006 rticipants held a r 501–1,000 ange of investm 1,001–5,000 ents, the impact o >5,000 f sto 60sck market Y Reflecting their higher aver 31 percent of 4 ounger participants tended t Investment Options Offered by Plan 01(k) participants held lifecycle funds. Also age age and o favor equity f 59 tenure, the 2003–2 unds, while o Percentage of plans lder pa known as “targe 008 38consistent group also had rticipants were more likel t-date” funds, th participants median and y to invest in fi ey are desig Percentage of assets an verage account ed to simplify xed-income se curities 50s Brady (2008). For an analysis 48 GICs are insur 53.2% 34.3% ance company 9.8% of the impa 19.7% products that guarantee 12.8% ct of changes in 6.9% a spe Social Security betw cific 6.9% rate of ret 18.0% urn on the inve een 1992 a 8.6% 14.4% nd 2004 on reti 19% sted capital over the life of the rement pattern 19.4% s, see 10.6% amounts tend t >$100,000 o be a negligible po >10–20 17% rtion o 28.2% f14% pla Percentage of account balances, n assets and that very little of loan 20.4% 10% $12,578 25.7% 10% 2008 18.8% amounts 9% gets converted into distributions i -27.1% 9% 67.8% 11% n 32 Profit Sharing/ >5,000401k Council of America. 33.9%52nd Annu 4.2% al Survey of Profit Shari 5.8% 19.1% ng and 401(k) Plans Reflectin 12.2% g 2008 Plan 21.6% portfolios and ongo securities—equity funds, Relationship Between ing contributions the e Accou quity po nt Balan helped rtio ces n o an f balanced f d S offset the impa alary ............................................................................... unds, ct of the stock market decline. The a and company stock—represented about 56 verage account among the percent of 401 ....................... (k) 19 Figure A7, 1999–2008 Consistent Group Had For year-end 2007 data, see $11,873 Holden, VanDe Longer Ten rhei, Alonso, a ure Than nd Copeland (2008). All Participants in EBRI/ICI 401(k) Database at Year-End while 83 percent of participants with account balances grea corporations to small business 50% es—wit Benefit Programs h a variety of investme offers a straightforward, b ter than $10 nt options. 0,000 had more t 19% asic exp 19% lanation of han 10 emplo years o yee b f tenure (Figur enefit programs in e 12). to exclude: (1) individuals eligible to participa 60s 40s Age Group 78.0% 5% 3.5% 2.0% >0–50 percent 41.4% 1.t9% e in a 401( 5.1% 1.2% k) plan who had 1.5.9% 1% >50–90 percent not elected to 1.0%14.6% 0.6% have their emp 8.7% 0. 5% 6% >90 percent $80,988 loyers make 0.7% 9. 21.5% 3% 0All world. Its computer Account Balances Increase With Age and Tenure 54.1%simula 6% tion analyses on Social Secu 10.6% rity reform and retireme 35.3% nt income a 18% dequacy $40,000 >$2,500,000–$6,250,000 $11,600 7,513 1,040,572 $29,975,536,933 60s $28,807 end 2007 a company stock or balanced fu nd year-end 2008 resulted from increased use o nds at year-end 2008 (Figure 28). Fo f lifecycle fund r examp s: At year-end le, 79 percent of participants in their 20s without 2007, 34 percent of recently hired 60s Quarterly Supp fewer years of 47.2% 40s 25.4% Average and median loan balance tenure and lementary Data 11.1% 5 p All ercent had mor ). 17.3% 24.2% 9.6%e than 30 17.4% 7.6% year s for 401(k) p s of tenure, th 14.3% 22.9% 21.6% articipant e same as in 2 16.9% 6.4% s with loans, 1 21.8% 007. The medi -26.4% 9an tenure 98–2008 54.2% at th 19.3% e 10.3% account balanc Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Equity, bond, money, and/or balanced funds e among the c 54 5%onsistent participants was $58 6% ,797 at year-en 53.1% d 2008 (Figure A8), more than four times the 29.4% 5% 22.2% performance s investing and a hu owed through in 401(k) account 80% tomate account rebalancing. an organization that “tells it like it is s because 401(k) plan part ,” icipants tend d ed to be heavily invested in eq 60s uity such as bo Gustman a contract. balances that Experience. Allnd nd Steinmeier (2008). 18% fwere much hig unds, Chicago, IL: Profit Sharing/ GICs and 18% h o er than t ther stable- 34.8% 18% he mvedian and 401 alue fun 18%4.8% k Council of America, 2009. ds, aver or mo age 5.7% ney fund account ba 18%s (18.9% F lances of the b igure 21). Fo 12.0% r example, roader databas 18% amo 18% ne (Figure 5). At year- g participants 18% 20.5% in their Year-End 2008 Snaps Figure 24, Average Asset Allocation Holden, Sarah, and Jack VanDerhei. “401(k) Plan Asset Al hot of 401(k) Asset -0.8% of 401(k) Accounts, by Participant Allocation .............................................................................. location, Account Balances, Salary and Invest and me Loan Activity in 1999.” nt Options ........................... ............................ Investment ......19 28 any give 2008n year. ........................................................................................................................... the private and public sectors. The EBRI Data 15% 10% book on Emplo ............................................... yee Benefits is a statistical 53 50s40% Equity Lifecycle 32.3%Non-Lifecycle Bond 4.4% Money 5.9% GICs /Stable 19.9%Company 12.6% -1.6% 21.6% consistent group of participants fell 7.2 percent between plan participan 20s ts’ assets. $33,27826.1% year-end 1999 a 11.8% nd year-end 2002 (Figure A9), 62.2% while the S&P 50s 500 Examining the interaction of both age and Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. -2.5% 38.6% a tenure with account balances reveals that, for a given age $71,840 group, average account All 300% 69.5%are uni 3.9% que. 2.8% -3.0% 2.4% 1.5% 1.4% 1.3% 0.9% 0.9% contributions; 49 >$6,250,000–$12,500,000 and (2) non-vested former employees who had 37.2% >2-5 76.1% 3,750 43.5% 1,076,028 not (at the time the Form 5500s were sub 38.6% $33,138,482,593 26.6% -21.7% $30,797 mitted) incurre 0. 247.1% 9% 14.5% d the All 54.2% Note: The tenure variable is generally years working at current employer, and thus may overstate years of participation in the 40.3% 7.2% 16% 21.7% Average 401(k) account balance, by age and tenure, 2008 14.5% 16% c 16% 7.2%16% 6.3% 16% 14.6% 16% 6.1% 16% 10.2% 11% 401(k) plan.24.1% 10.9% 401(k) particip equity funds h 40% Of which: lifecycle eld equities thro ants held lifecy b cugh co le funds, 22 p funds an option mpany c ercent held stock, balanced f non-lifecycle balanced fund 17% unds, or both. Indeed, 51 40.4% 30% 23.3% s, anpercent d 3 percent hel of participants in their 20s $7,495 d both. 17.5% a 12% median accoun current employer was seven y For year-end 2007 data, see t balance of $1 15% ears in 2008. The tenure com 2,655 among p Holden, VanDe /Stable-Value Funds arhei, Alonso rticipants in the entire datab , a posit nd Copeland (2008) for data f ion in the year-end 2008 ase (Figure 9). database is sim or earlier years. ilar to the tenure securities. At year-end 2008, a Company Institute Perspective Plans With Company Stock and GICs whether looking at the 2003– Vol. 7, no. 1 (January 20 2008 co 01a), and nsistent group or the entire EBRI/ICI EBRI Issue Brief, no. 230 (February 2 11% 401(k) databa 001a). Available se, 20s, the avera end 2008, the 27-10 Changes in Age Group ge allocation to equity fund average 401(k) Asset Allocati Funds on Betw account balan Funds een Year-E referen s w Balanced Funds ce work o cae of the consiste s 38 percent nd 2007 an n emplo Funds d Y y of assets, com ee ben e nt group was $86,513, almost ar-E Funds end fit pr 2008 ogr Value Funds p ams and ared with ............................................................ 50s work force-related issues. 28 Stock percent of asse $7,292 double the average accou Other Unknown ts among participants www. Total ebri.org ........... n t 19 60s 14% 25.2% 3.7% 12% 4.8% 26.1% 17.6% $7,19118.9% The analysis includes the 2.4 million recently hired participants (those with two or fewer years of tenure) holding balanced f 30s 15% 33.5% 13.3% unds in 2008; the 1.8 million 53.2% 37 12 200% >5–10 d 42.1% 29.0% 30.5% 22.2% -24.0% 122.0% total return index fell 37.6 percent and See Figure A4 $10,000in the appen based on the f dix for the averag acts the R. A ussell 2000 Ind e dollar-w s the Bylaws state: eighted asset allocation of the 2003–2008 consistent group of ex fell 21.0 percent (Figure 8). Between year-end 2002 and Figure 42 year- -9.1% $6,946 Figure 25, Average Asset Allocation of 401(k) Acco Figure A8, 401(k) Account Bal balances tend t >$12,500,000–$25,000,000 o Plans increase with tenure. For example, the ave 16% 16% ances Among 401(k) Participants Present From 2,351 unts, by Plan Size an 16% 1,293,808 rage account b 16% d Investment $41,108,120,576 alance of participants in their Year-End 1999 Throug $60,173 Options.................................... h Year-End 2008 $31,773 60s with up to two 16% ..........54 ..........30 PLANS WITH COMPANY STOCK AND GICs The tende Other stable- ncy v70% alue fun of the account balance-to-sala $6,815 ds include synt $6,856 AND/OR OTHER STABLE-VALUE FUNDS hetic GICs, ry ratio to peak at which consist $6,839 higher salar of a portfolio y levels and then of fixed-inc $6,821 ome securities fall off likely “wrapped” with a reflects the Russell 2000 In break in service period established by their p dex. Tacoma, WA: Frank Russell Company. lan (see U.S. DepaTenure (years) rtment of Labor, Employee Benefits Security Administration $58,797 $6,717 Equity, bond, money, and/or balanced funds, c 26 witho NEW EMPLOY $30,000 at ut equity funds www.i 1–100 ci. EES CONTI org/pdf/per07-01.pdf held lifecycle funds—wh NUED TO 31.2% USE and $6,644 BA -11.9% www.ebri.org/pdf/br LANCED ich will tend to 8.8% $6,659 FUND S, I be 9.7% iefspdf/0201ib.pdf N highly concentrated in equity se CLUDIN 12.1% G LIFE CYCLE 7.9% FUNDS. curities for that age grou Across all age groups 17.8% 5.7% , more p—as composition of Age 35% the year-end 2007 database, Percentage of but both recen Account Balance t year Invest s show a ed in Non-Lif n increase in lower-tenured participants, com ecycle Balanced F 40s unds pared recently hired participants holding lifecycle funds in 2008; and the 0.8 million recently hired participants holding non-lifecy Asset Allocati 40s on and Participant Age ........................................................................................... 33.9% 13.5% cle balanced funds in 2008. 52.6% ................................. 23 50 altogether, equity securities— Plans With Company Stock and GICs, $25,507 >10–20 equity funds, 23.0% and/or Other Stable-Value Funds the equity po 16.7% rtion of balanced 22.4% funds, 16.6% and company stock—represented -27.3% >20 Years 48.8% 56 per- in their 60s. Younger participa balance of $45, 30%519 among parn ticipants in the entire databas ts also had higher allocations to e. The median balanced funds, 401(k) account balance amon 19% particularly to lifecycle funds. g the consistent Lifecycle, or 20s 15% 43.4% 11.9% 6.7% 11.5% 6.7% $53,529 8.4% 9.1% 1.8% 0.6% 100% 250% b Asset Allocation Distribution of Recently Hired Participant Account Balance participants by For year-end 2007 data, see age. In addition, as Holden, Va observed nDe in the cross-sectional EBRI rhei, Alonso, and Copeland (2008). /ICI 401(k) database, among individual 401(k) 20s end 2007, the EBRI make 56.2% 31.7% S&P 500 total r (percentage of plans) s information freel 8.2% eturn index climbed 82.9 per 33.7% 19.2% y available to al 14.5%cent and the R l 2.3% 5.2% ussell 2000 Ind 2.5% ex more than d 2.2% 6.7% oubled. The av 11.3% 22.0% erage 12.6% Charac years of tenure b >$25,000,000–$62,500,000 terist was $17,619, compared with ics of Participants With Outstanding 401(k) Pla 25% 1,909 $172,555 for 2,313,950 participants in their 60s with more than 30 y $75,398,663,795 n Loans 40s $32,584 ears of tenure (Figure Among those who held balan EBRI/ICI 401(k) guarantee (typi influence of two competing forces. First -20 101–500 and GICs cally by an ins and/or other stable-value funds Database cued funds, rece rance company 35.0%, empirical research ntly hired parti or a bank) to pr 8.4% c suggests that ipan 10.6% ovide benefit payments ts in 20089.3% higher earners were more lik 5.2% according >20–30 ely to tend to contrib hold a high concentration of to the plan at book val 19.5% ute higher 6.7% ue. 2008a an Changes in Asse d 2008b, for further Age Group t Allocation Bet detail). This change in metho 0–2 ween Year-End 2007 and Year-End 200 >2–5 dology re >5–10 43.9% sults in a dramatic in >10–20 24.7% 8 crease in the n >30 umber of individuals 21.0% At year-end 2008, 401(k) account balances “In all its activities >20–30 18.3% 27 vari , the Institute shall ed with both age a 12.6% 19.4% nd tenure among the 1 14.2% 999–2008 -26.7% consistent gro 33.2% up of new or recent hires invested t their o Row percentages may not add to 100 percent because of rounding. Grn oup ly equity investment. 50sZero 1–10% Ano heir 401(k) ass 11–20% ther 8 perc 32.8% 21–30% ent of participants in their 20s ets in balanced 31–40% funds, includin 41–50% 13.5% 51–60% without g lifecycle fund equity funds 61–70% s. At year-end 2008, 36 percent of 71–80% had eq 53.6% u81–90% ity exposure thro 91–100% ugh Figure 26, Asset Allocati Figure A9, Average Account Balances Among Asset Allocati 20s on and Ion Distribution nvestment Options Contact EBRI of 401(k) Participant Account Balance to 34.2% ........................................................................................ 401(k) Participants 12.2% Publications, (2 Present Fr 12.2% 02) 659-0670; om Year-End 1999 Throug Equity Funds, by 6.1% fax publication 2.9% 22% orders to Participant Age h Year-End 2008, 14.0% .............................. (202) 775-6312. ............. 14.5%....23 31 with 2006 and earlier. Although the datab 14% 14% ase does not contain information 14% 22% 14% 25% on automatic enrollment, it is likely that automatic cent of 401(k) plan participants’ assets >10–20 Years . The asset allocation of participants in the consistent group varied with participant target-date funds, pursue long participants was $43,700 at year-end 2008, -term investment strategies, a nearly three-an $44,263 -20.5% using a mix of a d-one-half times the median a sset classes that follow a pre 20% ccount balance of $12,655 am 22% determined ong 60% Figure 50 45% 30s S&P 500. New 33 56.3% EBRI assume 38.7% York, NY: Standard & Poor’s. t8.9% o Cos a publi m 26.5% pany St c service re 15.1% ock in 24% 401 spo 11.4% (k)n Plan sibility to s w 2.6% itmake its finding h Co7.0% mpany St 3.3% o s co ck, b >2–5 Years 3.5% mpletely acce y Part 5.9% icipan ssi t11.2% Ag ble at e www.ebri.org 20.6% 11.1% c 30s 51.1% 7.7% 6.0% 11.4% 5.1% 6.6% 9.4% 2.0% 0.7% 100% participants in the 2003–2008 account balanc ________. “The Impact of Employer-Selected >$62,500,000–$125,000,000 501–1,000 20% Of which: lifecycle e among the 1999–2008 cons consistent grou funds an option 31.7% 780 istent group of partic Investment O p, the allocation of account balances 8.6% 23%1,916,154 p9.7% tions ipants increased 128.0 p on 401(k) Plan Participants’ Asset Allocations: Preliminary $68,713,915,724 6.3% to equities varied widely around th 3.9%ercent between year-end 20 20.9% $35,860 13.8% e 02 and 50s All 19.4% 13.6% 32.8% 19.6% 14.7% 17.7% -23.6% 14.9% 42.0% their accounts in balanced 51 13). Similarly, the averag 30% 20s e account balance of participants funds compared with past years. $3,237 $7,001 -22.1% $11,491 At in their 40s with up to two years of tenure w year-end 2008, more than half (56 percent) of recently hired as $11,224, percentages of A lifecycle fund typically rebalances to an increasingly conservative portfolio as it approaches and passes the target date of 30s 60s salary; therefore, one would Subscriptions to 42.4% 32.1% expect the ratio of account balance to sa 7.4% EBRI Issue Brie8.2% fs are included 13% 12.8% 7.1% as part of lary to rise with salary. However, tax 13%2.6% EBRI membership, or as part of 16 the fund, which is usually 55.1% 12.8% 15.1% a reported as active participants in 401(k) In the 2008 EB participants, as they do in the by Age and T RI/ICI 401(k) database, 88 pe enure 28% .............................................................................................................. cross-sect plan ional s; in 2004, the rcent of participants we database. Younger participants or thos number of acti re in plans offering l ve part 13%icipants e with sho oincreased to 53.1 million (new ans. However rter jo ....................................... b tenure tended t , as has been the case o have 55 13 Asset Allocation by Investme 26% nt Options and Age, Salary, and Plan Size.......................................................... 13.3% ................ 25 the acco no Investment per In the data n-lifecycle balanced fu 20s unt bal 78. bas fa 1% ormance likely explains much nces o e, there has be f3. recent nds, 3% and ano ly hired participants in their 20 en a downward 3. 24 5%ther 4 2. percent held co of the change 9% trend in 401(k 1.8% s in mpan s )were invested in balanced f 401(k) par plan participants’ holdings of 1. y stock a 4% s their only equity investment t1. icipants’ asset 2% 30s 0.5%alloca unds, compared with 28 percent in 45 40s and concentra 0. tions over time. Much of the 4% . Fifteen percent held 0.3% tion in company 6.5% enrollment is pl $20,000 200% aying a role in bringing in newly hired workers, which lowers the averag 12.9% e tenure. 40s 53.8% 37.8% 11.0% 24.3% 13.9% 10.4% 2.8% 7.3% 5.0% 2.3% 7.8% 14.0% 17.3% 11.6% age, a pattern that Some recordkeepers supplyi -30 Orders/ is also observed in the cross- function strictly in an objective and 11.1% ng data were unable to provide comp sectional EBRI/ICI 401(k) database. Younger participants generall lete asset allocation detail on certain pooled asset classes y tended a,b reallocati participants in the entire database. on, typically rebalancin 100— so that all deci g to be more conservative a sions that relate to employee ben nd income-producing over time. efits, whether made in Cong At year-end 2008, nearly ress or board room 7 per- s or Figure 27, Asset Allocation Distribution of inclFindings. uded1,001–5,000 in the ”f Wo und's name. rking paper pre >2-5 Loans From 401( pared fo 33.8% 56.0% 401(k) Participant Account Balance to Equity r the C 7.0% enter fo k) 34.2% Plan r Pensi s Tended t 8.9% on and Retirement Research ( 34.2% o be Small 6.8% 25.2% 4.6% Funds, by Participant Age, Tenur -18.7% CPRR) 22.9% Current Pensio 185.9% 11.2% n Policy e, >$125,000,000–$250,000,000 $31,421 9.7% 508 $31,467 2,192,644 $87,958,146,715 $40,115 average of 56 Equity, bond, money, and/or balanced funds, All 150% percent for the consistent group as a whole. $199 annual sub 31.0% scription to Thirty EBR -six percent of participants in the consistent group ha I Notes 12.9% and EBRI Issue Briefs. 12% Individual 56.1% 12% copies are availa d more ble year-end 2007 40sPer40s centage (Figure A9). In 2008, as the 30s of rec 46.3% ent$7,642 ly hir 6.3% ed p 39.9% arS&P 500 total return tic $14,952 6.5% ipant 5.5% s in plans 12.0% $27,809 offer index fell 5.5% 7.1% ing c $39,414 ompany 37.0 percent a 9.4%7.2% stoc 11.1% kn as 2.7% d the Russell an inv 2.3% es16.9% 0.6% tm 2000 Index fell ent option 100%16.6% , 2008 compared with $101,625 for $28,714 $4,400 participants in their 40s with more than 20 years of tenure. participants holding balanced funds had more than 90 percent of their account balance invested in balanced funds, compared method) from 44.4 million (old method; see code contributi Distribution 10% of Equ on limits and nondiscriminatio ity Fund Allocations and Participan U.S. Department of n rules, which aim t Exposu to ensure that employees Labor, Employee Benefits Secu re to Equities ................................................... of all income ranges attain the rity Administration 2008b). As ................ 25 smaller accou for the 13 year nt balan s that the data 50% ces, while th base has trac ose who w ked 401(k) plan ere older or hapartic d longer jo ipants, relatively few participan b tenure tended to have higher ac ts made use of this borrowing count balances. For 50s 2007, and abo so U.S. Department of Labor. Bureau of Labor Statistics. stock. In the wake of the collapse of Enron in me co 49.3% mbinatio u 31.5% t 7 percent in n of lifecycle 13.8% 1998. At year-end 2008, alm funds, 23.4% non- 13.3% lifecycle balanced 2001, participan 10.1% Nation ost 23 perc fal Compen unds, ts’ aware 3.3% or co ent of the account balances of recently hired part sation n mpany sto es 7.5% s of the need t Survey: Empl 5.3% ck as th 2.8% oeir equity inves diversify may oyee Benefits in Private Indus 5.2% 11.8% have increase tment. 20.8% As a res 14.5% d and icipants u try in lt,11.5% Sources and T movement in the largest component, equity funds, tends to $25,292 30s 77.5%ype of D 4.9% >5–10 ata 4.5% 39.2%3.7% 27.6% 1.8% reflect overall equity market 1.29.2% 3% 1.1%21.8% 0.5%prices, which generally rose from -20.8% 0.4% 0. 121.3% 3% 4.1% Note: “Funds” include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment product Issues Confere families’ ho nce, at Miami University, Oxford, OH, June 8–9 2001 mes, are based on the highest quality, most depe (May 2001b). ndable informatio $4,089 n. EBRI’s Web primarily invested in the $4,167 site posts Figure A10, Percent Change in to favor equity funds, while older pa or Sa>5,000 lary $5,000 ...................................................................................................................... Average Account Balances 33.1% rticipants were more likely to invest in fi 4.9% Among 401(k) Participants Present From Year-End 1999 Through 6.8% 7.1% xed-income securiti 3.0% 5.0% .............................................. es such as bond funds 25.7% 3.4% -33.8% 16.0% , GICs 31 cent of 401(k) assets in the d for one or mor Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. 25% e of their clients. The final EB atabase were in RI/ICI 401(k) data vested in lifec 2.9% ycle funds. Am base includong participants in es only plans for which at least 90 percent of all p their 20s, 15 percent of their 3.3% lan 50s and company stock $3,902 Percent with prepa age of 31.4% eligible pa yment4.9% for $25 each 2.1% rticipant 1.3% (f7.0% or printed s, by age, copie7.5% 2008 s). 16.6% Change of Address: 3.3% 25.9% EBRI, 1100 13th St. 17.9% 16.3% >$250,000,000 $3,824 Cerulli 671 1.9% 12,956,560$3,832 $729,962,260,572 $3,893 20s $56,339 $3,889 40s $11,224 $20,385 $38,510 $65,512 $101,625 than 80 perce 33.8 percent, the averag nt of their accounts invested in unbiased manner and not as an advocate e account balance among the 1999 equities, while –2008 co 12 percent hel 2.0% nsistent group of par d no equities att all in 2008 (see Figure A5). icipants decreased 26.3 percent. 50s 36.0% 6.0% 7.1% $3,700 13.9% 6.9% 15.3% $3,661 11.7% 2.6% 0.5% 100% with 48 percent in 2007, 43 p -40 Distribu Subscriptions a tion of Participants’ercent in 2006, and 7 perce Balanced Fun $3,659 d Allocations by Age nt in 1998 ................................................................. (Figure 36). Concentration is highest among recently hired -37.0% ...................... 29 60s benefits of the security indicated. the United Stat 38.0% 150% 80 25.3% 401(k) plan, constrain thes es, March 2007 14.3% >10–2018.0% . Washington, DC: U.S. Department of Labor, Bu 22.4% 10.0% e high-income individuals’ ability t 16.2% 8.0% 2.6% 21.5% 6.5% o save 15.9% 4.9% in the pl reau of Lab 2.7% an. See Holden and VanDer -24.1% or Statistics, 20 27.8% 34.4% 52.0% 07. Available at 10.7% hei 11.1% the Departmen example, with the 1999–200 privilege. At year-end 2008, only 18 percent t of Labor notes: “In a purely 8 consistent group, participants in a of those eligible economic sense and for loans had their 20s at y for research purposes, individual 401(k) plan loans ear-end 2008 had an outstandin >10–20 Years average s in these groups sho g (Figure 46). account balanc As in uld not e of Age All The analysis includes the 0.4 million recently hired participants (those with two or fewer years of tenure) holding balanced f 33.2% Perc 5.3% entage of Accou 7.1% nt Balance Inv 7.1% 38% ested in Com 3.1% pany unds in 1998; the 1.4 million recently Stock25.4% 15.5% in their 20s were invested in lifecycle funds, many participa 401(k) account balances varie some plan sponsors changed 1996 through 1 Year-End 2008, by all resea n999, before falling through ts with no Age and rch finding equity funds plan design (se d with both age and ten Tenure s, publi had ............................................................................................... c 20 ations, an expo compared with almost 19 percent at year-en e Van 02, rising again sure to Derhei, 2 ud n re a equi emong th 002) ws alert ty- from 2003 thr related investments thro . In addition, some of this movement m e consistent group of participants, as they do in the s. EBRI also exte ough 2007, an nds its e ugh co dd then droppin 2007. mpany st 23% ducation and pu o .............................. ag in 2008 (Figu c y be the res k or balanced funds bliu clt of se rcross- es 8 rvice 55 40s 60s 76.7% 5.3% 4.6% NW, Suite 878 24.5% 4.0% , 4.0% Washington, DC 2.1% 1. 35% 6.6% 4% , 20005-4051 1.2%, (2 6.7% 02) 659-0670; f 0.6%3.7% 0.a4% x number, (202 38.4% 0.3% ) 775-6312; 3. 13.1% 4% 0% Of which: lifecycle funds an option 0.9% 10.3% 23% 12.1% Several recordkeeping organi and o assets could be identified. $10,000 ther stable-value funds,zations provided records on active or money funds. participants in 401(k) plans at year-end 2008. These plan 401(k) assets were invested in lifecycle fund All 54,765 s, while among part 20% 24,000,380 icipants in their 60s, almost 6 percent of their 401(k) a $1,092,467,739,068 $45,519 ssets The distribution of account b 40% 50s >20–30 alances und $14,670 17.0% erscores the effects $24,004 11.8% $43,746 of age and t 18.1% $76,057 enure on account balances. In a given a 13.8% $140,407 -24.5% $145,990 32.7% ge group, AllFigure 28, Percentage of 401( Distribu 54.1% tion of Participan 34.6% 10.1% ts’ Comp k) Plan Participants Without Equi 25.0%any S 14.2% tock Allocati 23% 10.8% ons, by Age ty Fund Bal 2.4% ................................................................ 6.9% ance Who Have Eq 2.4% 2.8%uity Exposure, by Participant 10.1% 16.6% ..................... 18.6% 11.4% 29 The 1999 www.b –200 ls.gov/n 8 consistent group’s averag cs/ebs/sp/ebsm0006.pdf e balance at ye ar-end 2008 was 23% up 56.0 percent compared with year-end 1999 ________. “Contribution Behavior of hired participants holding balanced funds in 2006; the 2.0 million recently hired participants holding balanced funds in 2007; 401(k) Plan Participants.” Investment Company Institute Perspective. and the 2.4 million recently hired Vol. 7, no. 4, and participants with lifecycle fund 28 Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. 60s 28.4% s; at year-end % 5.4% 2008, 61 percent of 6.8%%% 16.4% % recently h 8.4% i22.3% red participants holding lifecycle funds held 9.3% 2.8%% 0.4% 100% more (2001b) for a complete discussion of EBRI/IC 20% role to improving Ameri Loan as None a P 100 ercentage of 28% None e-m c aan il: 100 s’ finan subscriptions@ebri.o I findings a None cial kn nd owle othe 100rg dge rs’ research on the relationsh None thro Me Age Group mbe ugh its a rship Information: 100 w None ard-winning p 100 ip between Inquiries reg ubli None c se contribution rates rvice arding EBRI campaign be included in t $21,137, comp previous years, loan activity varies with Group ared with an a Z hero e count of active participants.” However, th or opponent of any position.” 1–10% verage of $137 11–20% age, tenure, ,337 fo 21–30% r participants in their 6 acco 31–40% unt balance, e form schedul 41–50% and 0salary. e needed to m s (Figure A9). 51–60% Of those participants in plans offering loa 61–70% ake the adj 71–80% ustment is no longer 100% 81–90% 91–100 ns, % or both (Figure Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. 29). sectional database. Younger participants regulations put in place by the and 20). At ye See total returns for the large 50s 76. ar-end 2008, e 1% 5.5% quity fund Pension Protection Act of 2006 (PPA company st 4.6% s were 37 percent of the a or tho 4. ock index reported in Morningst 1% se with sho 2.2%rter jo1. b tenure tended to ssets in 6% ), which resulted in reg the EBRI/ICI 401(k) database 1.a 3% r (2009). have >5–10 Years 0.6%smaller acco ulation 0.4% s that limit the length unt balances, , compared with a 0.4% while 3.2% of time Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Equity, bond, money, and/or balanced funds, 21% 24% recordkeepers include mutual -50 a >30 fund companie 15.4% s, insurance co 9.7% mpanies, 16.6% and consulting fi 12.2% rms. Although the -22.8% EBRI/ICI proje 27.8% ct has were invested in lifecycle funds. Age or Te participants holding balanced funds in 2008. nure, 2008...................................................................................................................................................32 Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Figure A11, Average Asset Allocation of 401(k) Acco 60 60s ® $17,619 $25,130unts of 1999–2008 Co $42,938 $74,284 nsistent Grou $135,018 p, by Participant Age $172,555 .......................56 14 Asset Allocati 100% All consistent on of Recent percent ly Hired Particip percent ants................................................................................ percent percent percent .............................. 29 shorter tenure a EBRI Issue Brief Minor investment options are not shown; therefore, row percentages will not add to 100 percent. Percentages are dollar-weighted 100%tends to mean , no. 238 (October 2001c). A that a higher percentage of p vailable at awww.ici rticipants will .org/pdf/per07-04.pdf have account ba an lances of less d than $10,000. averages. For (Figure A10); over the nine-ye Remaining Acca ount r period, the average account Balance 20s balance gre 40s w at an an 60s nual average rate o All f 5.1 percent. membership and/or contributions to EBRI-ERF b should be directed to EBRI President/ASEC than 90 perce 401(K) PARTI For 401(k) asset figures, see Investment Co Minor investment options are not shown; therefore, row percenta C nC t of their account balance in lif hIoosetoSave PANTS CONTIand the NUED TO co SE mpanio EK DI ecycle funds (F mpany VERSIF n site ges will not add to 100 percent. Percenta Institute (2009b) and ww ICATI igure 37). Thirty-five percent of w.cON hoo OF TH setosav Brady, Holden, and Short (2009). EIR I e.o N rg VESTMENTS. ges are dollar-wei recently hired participants gThe hted avera share of 401(k) ges. a and salary. For an a b nalysis of 401(k) participants’ contribution activity during the bear market of 2000 to 2002, see Holden required. Using National Comp the highest per Note: The median account balance at year-end 2008 was $12,655. 20s 1997 60s 67. centages of pa 1% 1998 8. 1999 All 4%rticipants wi ensation Surve 2000 5.7% 14.1% th outstanding loan balances wer 2001 y data a 4.7% 8.5% n 2002 d hist 3.3% oric2003 al relationships and trend 13.9% 3.0% 2004 e amon 1. 9.0% 8% 2005 g participants in their s0. ev 2006 8% -22.9% ident in the 2007 0.6% 30s, 40s, or 50s Form 5500 data, ICI 18.3% 2008 0.4% Aug-09 4.2% Given these inv b and company stock, and GICs estment patterns, the growth pattern of 401(k) and/or d balances is influenced by st b,d ock market returns. As stock participants could be required tho 40 percent sha se who Row percentages may not add to 100 percent because of rounding. were o re at year-end lder or had lo to hold co 2002, near the nger job tenure tended to mpan bottom of that y stock contributed to their accounts by have higher bear market. D account balances. espite the decrease in equitie their employer; specified rules regarding For example, within the co s’ share and th nsistent e The analysis is based on samples of 1.2 million participants with two or fewer years of tenure in 1998 and 4.0 million particip ________. 60s National Compensation Survey: E group 77.4% Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. 30% 5.2% 38.3% 4. 6.0% 1% 3. mpl 9% 6.7% oyee Benefits in Private In 2.1% 13.8% 1.6.6% 5% 50% dustry in the U 1. 14.8% 3% 0.6% 10.8% nited States, March 2008 ants with two or fewer years of tenure in 2008. 2.6% 0.4% 0.5% 0.4% 100% . 3.1% 29 A lifecycle fund typically rebalances to an increasingly conservative portfolio as it approaches and passes the target date of Equity Funds Bond Funds Company Stock Balanced Funds GICs and Other Money Funds the fund, which is collected data from 1996 through 2008, the universe of data providers varies from year to year. In addition, the sample of Year-End 2008 Snaps b www.ebr $0 i.org/pdf/briefspdf/1001ib.pdf hot of 401(k) Plan Loan Activity........................................................................................................ 33 Chairman Dallas Salisbury at the above address, (202) 659-0670; e-mail: salisbury@ebri.org example, 93 percent of participants in their 2 Analysis of contribution activity of 15% Zero (No Loan) 401(k) plan participants 0s with two or 90% fewer years of in 2008 in the 78% tenure had EBRI/ICI 401(k 89% account balances ) 82% database has of less than $1 not been 0,000 A lifecycle fund typically rebalances to an increasingly conservative portfolio as it approaches and passes the tar >2–5 Years get date of the fund, which is usually b Figure 29, Average Asset Allocation for 401(k) CHAN GES IN PARTI >2-5CIPANTS’ ACCOUNT BALANCES I 38.9% Plan Participants Without Equity Fund 25.7% N 26.5% THE 1999–2008 CONSISTEN 20.4% Balance, by Participant Age or Tenure -18.4% d T GROU117.2% P: In any given Figure A12, Asset Allocati Note: “Balanced funds” include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investmen Note: At year-end 2008, the average account balance among all 24.0 million 401(k) particiants was $45,519; the median account on to Equities Varied Widely Among Participants in the 1999–2008 Consiste t product primarily invested in a mix nt Group .....................56 ho accounts invested in company Among individual participants, the allocati lding no 30s other stable-value funds n-lifecycle balanced funds 62.6% 9.8% stock continue 7. had m 0% on of account balances to equities (equ ore than 90 pe d to shrink, falling by nearly 5.5% 3. rcent 8%1.7% of their acco 3.3% 1 percenta unt balance invested in no 2.ity funds, 0% 29.3% ge point (to 9.7 percent) in 2008. That 0. company stock, and the equit 9% 0.6% n-lifecycle balanced 38.9%0.5% y 4.0% 15 and VanDerhei $0 (2004c). For summary statistics on contribution activity in 2008, see Fide Stable-Value Funds lity Investments (2009), The Minor investment options are not shown; therefore, row percentages will not add to 100 percent. Percentages are dollar-weighted estimates the n (Figure 47). In addition, partic Washington, DC: U.S. Department of Labor, Bu usually included in the fund’s name. 40 EBRI/ICI 401(k) umber of active 401(k) participants to be ipants with five or fewer years of tenure or with more than reau of La 49.8 million in 2008 and the bor Statistics, 2008a. Available num30 years of ten ber at of 401(k) plans to be 474,800. 20% averages.ure were less likely to market values 1999 generally move 2000 d upward between 2003 a 2001 2002 2003 nd 2007, the aver 2004 age account ba 2005 lance of the 20 2006 20% 03–2008 consis 2007 2008 tent group, particip the notification increases in sh Sources: Bloomberg, Barclays Global Investors, Frank Russell Company, and Standard & Poor's. ants in their 20 ares o of blackout periods; and f bond fus at year-end 2 nds, GICs and required quarterly s o 008 had t21% her stable- an avvalue funds, erage account tatements that and balance of $18, mo must in ney funds, clude n mo 598, compared with an avera otice highlighting the impo st 401(k) participants rtance o ge of f Estimates of the number All 50% 77.1% 5.0% of 401(k) plans 4.4% an 3.8% d active participants are ba 2.0%Investment Category 1.4% se1. d on a co 2% mbination of data fr 0.6% 0.4% om U.S. Department 0.3% 3.9% plans at any gi Availability and ven provider ca Use of 401(k) n change. aPlan Loans Thus by , aggregate fig Plan Size ......................................................................... ures in this report generally should not be used to estimate time ......................... 33 included in the fund’s name. of equities and fixed-income securities. 1–10% >5–10 36.3% 25.1% 1% 26.2% 6% 30s 4% 18.5% 5% -20.5% 102.8% c balance was $12,655. The 2003 e EBRI/ICI tenure variable is generally years working at current employer, and thus may overstate years of 2004 2005 2006 2007 31% 2008 c >5–10 Years conducted. However, results from an ICI sur in 2008, compared with 65 percent of participants in their 20 Of which: lifecycle funds an option vey of DC plan re s with between five and cordkeepers finds that only 10 ye 3.7 percent of participants stopped ars of tenure (Figure 14). Older Asse a EBRI is sup t Allocation and Investment O GICs are guaranteed investment contracts. ported by organizations from all industries and sectors that appreciate the value of ptions 24% 1.3% 21.0% 28.1% A lifecycle fund typically rebalances to an increasingly conservative portfolio as it approaches and passes the target date of year, the chan 40s Database ge in a participant’s account b 62. 20% 1% 9. 37.4% 6% 6.6% 6.8% alance is the s 8.2% 5.6% 12.3% 4. u0% m of th 7.1% ree fac 3.3% tors: n 15.2% 39 2.e 0% w con 9.7% tribu 1.0% ti the fund, which is usually included in the ons by the 2.4% 0.7% 1.0% participant or the 100% 0.5% 4.4% funds continued a ste po c rtio www.b n o at year-e f bala ls.gov/n nced fund nd 2008. ady decline tha c1996 s/ebs/benefits/2008/ 18%s) va 1997 ries widely around the t started in 199 1998 ownership/private/table 1999 9. Recently hired 2000 averag 2001 e of 56 percent 401(k) participants contributed to this trend: they were l 02a.pdf 2002 2003 for all particip 2004 2005 ants in the 2008 database. Thirty- 2006 2007 2008 ess All indexes are set to 100 in December 1996. The estimate of the num ________. “Ca use the loan pr Vanguard Group (2009), and Hewitt Associates (2009). n ovision than other particip 401(k) Accumulations Generate Si ber of active 401(k) plan participan ants. Only 12 percent of participants with gnificant Income for Future Retirees?” ts is based on a combination of data from U.S. Department account balances of l Investment Company Institute ess than $10,000 had of group rose, on average, 17.0 Figure 30, Asset Allocati GICs are Editorial Bo Source: guaranteed investment contracts. T Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. abu ard: la participation in the 401(k) plan. tio Dallas L ns from on to EBRI . Salisbur /Ipercent per ye Equities CI Par y, publisher ticip Varied Widely Am ant-Dire ; Stephen Blakely ar over that fo cted Retirement ong Partic , P editor ur lan-year time period. In 2008, stock market performance tu Da . Any ta Co ipants....................................................... views llectionexpr Pr 30s oje esc sed in this p t. ublication and those of the author ...................... s sho rned uld 35 diversification (see U.S. Join $125,052 for p Figure A13, Changes in Consi appeared not t 10% o articipants in their 60s (Figure 6). have made d >10–20 21% t Committee on stent Partic ramatic shifts in their asset all 21.0% ipants' Inve Taxation, 2006). stment in 14.5% ocations in 2008. Equity Fu 18.4% nds, 2007–2008 12.3% .......................................... -23.9% 40.2% ............57 Characteristics of Participants Wi d th Outstanding 401(k) Plan Loans............................................................. 0–2 Years ................... 33 of Labor, Bureau of Labor St >10%–20% atistics, and U.S. Department of 2% Labor, Employee Benefits Se 5% 2% curity 4% Administration reports. See trends, unless b otherwise indicated. Records were encrypted prior to inclusion in the database to conceal the identity of Because few plans fall into this category, these percentages may be heavily influenced by a few outliers. Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. 31% fund’s name. a a contributing to workers display a similar pattern. For exampl All20 their accounts in 2008 (see Ine, 66 percent of participants in their 60s vestment Company I 100% nstitute (2009a). In ad 100% with di two or fewer tion, analysis of contribution years of ten 100% ure h activit ad y The S&P 500 index consists of 500 stocks chosen for market size, liquidity, and industry group representation. unbiased, reliable information on emplo 50s 50% 62.2% 10.0% 6.7% 5.5% y 3. ee b 9% enefits. 3.1% Visit 1.www.e 9% bri.o 0.9% rg/about/join/ 0.6% for more. 0.5% 4.8% employer or both; total investment return not be The a ascribed to the officers, nal Minor investment options are not shown; therefore, percentages do not add to 100 percent. Percentages are dollar-weighted aver ysis includes the 24.0 m trust illion 4 ees, 01(k) m p e o m lan bn p ers, or acco articipunt balan aother sponsors of the E nts in the ye ces, ar-e which depends o nd 2008 m EBRI ploye /ICeI 4 Benefit Research 01n (k) the pe database rfo . rmance o Institute, the EBRI Educ ages. f financial market ation and s and Note: "Funds" include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment product Perspective. Vol. 8, no. 3, and >20–30 EBRI Issue Brief 14.5% , no. 251 (November 2002). Available at 8.8% 23% 13.8% 8.3% www.i -23.7% c primarily invested in the i.org/pdf/ 17.2% per08-03.pdf and likely to hold e eight percent of participants had more than The investme a 0%nm t options that a plan sponsor offers significant ployer stock. 80 percent of their account balances inve ly affect how participants allocate sted in equities, while 12 percent held no their 401(k) assets. Figure 22 d Labor, Bureau loans outstanding. of Labor Statistics (2007, 2008a and 20 24% 08b) and U.S. Department of Labor, Employee Benefits Security sharply neg 38 Average L Row percentages may not add to 100 percent because of rounding. Percentages are dollar-weighted averages. ative, with the S&P 500 total return index falling 37. oan Balan >20–30% ces .......................................................................................................... 2% 0 percent 3% (only in 1931, when the S& 1% 3% ..................................... P 500 total return index 34 c Note: “Funds” include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment product b a primarily invested GICs are guaranteed investment contracts. 52 discussion in endnote 2. employers and Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. b employees, but were coded so that both could be 10% tracked by researchers over multiple years. Data provided ________. “Employee Benefits in the United Figure 31, Asset Allocati At year-end 2 The Russell 2000 Index measures the performance of the 2,000 smallest U.S. companies (based on total market capitalization) inc GICs are guaranteed investment contracts. 008, 57 percen on Distribution of 401(k) Part t of balanced mutual fu States, Marc icipant Account Balance to nd as h 2008.” News release, August 7 sets were invested in equities (see Investme Balanced Fund , 2008b. Available at s, by Age luded in the Russell 3000 nt Company In ....................... stitute, ......36 Resear b ch Fund, Of which: lifecycle or their staffs. Nothin funds an option g herein is to be construed as an attempt to aid or hinder the adoption of any pending legislation, regulation, Figure A14, Changes in Consi security indicated. R60s ow percen61. tage 3% s may no10. t ad >30 4% d up stent Partic to 100 pe 6.4% 9.8% rce ipants' Inve nt beca 4. use 8% ostment in f ro 4.4% undi3. ng 7% . Bond F 75.4% 10.6% 3. und 0%s, 2007–2008 1. 6.6% 7% 72.4% ............................................ 1.0% -22.6% 18% 18% 0.7% 72.6% 4.8% 0.6% ........... 6.5% 57 B account balanc during the bear Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. a Plan-specific information on loan provisio lanced, www.ebr Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. lifecycle, 1998i .org es of less than market of 200 /pdf/briefspdf/1102ib.pdf and no 1999 n-lifecycle fund $10,000. In contrast, only 19 perc 0–2002, using 2000 2001 us ns is available for the majority of the pl e varied little by age group a the cross-sectio 17% 2002 nal EBRI/ICI 2003 ent of those in their 60s 2004 mong rece 401(k) databas 2005 ans in t ntly hired participants, with the exceptio es, with more than 20 years of te he sample ( finds that overall 401(k) 2006 including virtually al 2007 2008 nure l of n 5% Age group is based on the participant's age at year-end 2008. Asset allocation by age group among the 2003–2008 consistent group of 6.0 million on the allocation of assets in an individual’s account; and withdrawals, borrowing, and loan repayme 28 nts. The change in any presents the di equities at all in 2008 (Figure a in the security indicated. c stribution of plans, particip 30). ants, and assets by four combinations of investment offerings. The first category is Transaction activity is not tracked in the 13% EBRI/ICI 401(k) database; nevertheless, some participant asset allocation activity can Appendix....................................................................................................................... >30–80% 12%4% 7% 3% 2% ................................................. 6% 48 Note: “Funds” include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment product Administration (2008a, 2008b, and 2008c). fell 43.3 percent, did that measure perform Index (which tracks the 3,000 largest U.S. companies). Includes the 18.0 million participants with accounts at the end of each year from 2007 through 2008. A given participant may be a as poorly on an annual basis as the market di 2% d in 2008) primarily invested in the security indicated. counted in multiple and the Russell 2000 a Account balances are participant account balances held in 401(k) plans at the participants' current employers and are net of pl c or interpretative 0 rule, or as legal, 10% accounting, actuarial, or other such professional advice. 9% an loans. Retirement savings held <0.5% www.b Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. 401(k) plan participants with account balances at the end of each year from 2003 through 2008. ls.gov/news.release/pdf/ebs2.pdf 20s 34 for each participant include da Account balances are participant account balances held in 401(k) plans at the participants' current employers and are net of pl A lifecycle *Account balances are participant account balances held in 401(k) plans at the participants' current employers and are net of p Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. All fund typically reba All lante of birth, from which an ag ces to an incr 19.9% easingly conse13.9% rvative pe ortf group is assigned; date of olio as 19.7% it approaches a14.5% nd passes t hire, from which a tenure he ta-24.3% rget daan loans. Retirement savings te of the fu41.6% n lan loans. d, which range is is usually 16 Quarterly Supp All 63. lementary Data 8% 9.4%). 6.5% 5.2% 3.7% 3.2% 1.9% 0.9% 6% 0.6% 0.4% 4.3% had account ba of recently hired participants in their 20s PARTICIPANTS’ 401(K) LOAN ACTI lances of less than $10,000. VITY wh WAS STABLE. o were more likely to be highl In 2008, 18 percent of all 401(k) pa y concentrated in such f rticipants eligible for loa unds. For example, 4n0s had per- the small plans participants’ contribution rates were little cha d c investment categories. For example, a participant who is 100 percent invested in equities will be counted as "none" in each of ). Some plans without this in Average lo formation are classified as nged in an o2000, utstanding 2001, and 200 ha Median loa ving a loan provi 2, when compared with 1999 (see Holden an n outstandingsion if any part the other investment icipant in the plan d has individual participant’s account balance is Figure 32, Asset Allocati Automatic enrollment tends to reduce the a on Distribution of 401(k) Partic influenced by t verage tenure ipant Account Balance to Ba he magnitudes of of participants in the 401(k) pl these three fac lanced Funds, tors relative to an. The by Te Profit Sharing/401k nure the starting ac .................... C coun o.... uncil t 37 in plans at previous employers or rolled over into IRAs are not included. Comparison of 2003–2008 Co a nsistent Group of 401(k) 20s Participants to EBRI/ICI 401(k) Database .................................... 48 be inferred by the base gro Formerly the Lehman Brothers U.S. Aggregate Bond Index, the Barclays Capital U.S. Aggregate Bond Index is composed of securitie A lifecycle, or target date, fund typically rebalances to an increasingly conservative portfolio as it approaches and passes th upanalyzing , which co >80% 0% the y nsists o ear- f plans that end snapshdo ots of a consistent not offer company sto 1% group of p 1% ck, GICs, articipants. For o *r other stable- example, participant action can be 1% value fu e target date of the fund, nds. s covering government and Twenty-nine Note: Components may not add to 100 percent because of rounding. The Tenure variable is generally years working at current employer, and includRetirement savings held in plans at previous employers or rolled over into IRAs are not included. ed in Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. the fund’s name. Index falling 3 held in plans at previous employers or rolled over into IRAs are not included. A lifecycle fund typically rebalances to an increasingly conservative portfolio as it approaches and passes the target date o 3.8 percent (Figure 8). In 2008, the average 401(k) account balance of the 2003–2008 consistent group f the fund, which fell by 3 ________. “40 Source: Tabul categories. 1(k) Plan Asset ati <100 participants ons from EBRI/I Allocation, Account CI Participant-D 100–500 irected R Balances, and Loan Activity in 2002.” eNumber of Participants in Plan tirement Plan D 501–1,000 ata Collection Project.1,001–5,000 Investment Company I >5,000nstitute assigned; outstanding loan bal b 0% ance; funds in the participant’s investment portfolios; and asset values attributed to those which is usually included in the fund's name. a Consistent Group in 2003 EBRI/ICI 401(k) Database in 2003 Consistent Group in 2008 EBRI/ICI 401(k) Database in 2008 See Investme Consistent Group in 1999 nt Company Institute (2009b). EBRI/ICI 401(k) Database in 1999 Consistent Group in 2008 EBRI/ICI 401(k) Database in 2008 39 The analysis is based on a group of 2.1 million participants with account balances at the end of each year from 1999 through 2 corporate bonds, mortgage-backed securities, and asset-backed securities (rebalanced monthly by market capitalization). The ind Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. 008. ex's total return consists of cent of recently hired participants in their 20 an o a loan outstan VanDer b utstanding hei, 200 thus may overstate years of participation in the 401(k) plan. d ding against th lo 4c). Whether measured in d an balance.Less Than $10 This may eir 401(k) account, the same ,unde 000 ors held more llar amounts or percen state the num than 90 percent percentage as ber o >$40,000–$50,000 f plans offering loans (or part tage of salary contributed, on at year-end 20 of their account balances in b 07 and More Than $100 icipants eligible for loans) year-en aver ,000 age, 401(k) participants’ a d 2006. Loans lanced funds, Analysis of the a The analysis is based on a sample of 6.0 million participants with account balances at the end of each year from 2003 through 0% 1999–2008 Consistent Group................................................................................................................ 2008. 48 balance. For example, a contribution of a U. of America (2009) reports that there is an up S. Department o Note: The sample of participants changes over time. is usually included in the fund’s name. f Labor, Employee Benefits Security Ad given dollar amount produces a l ward trend in t ministratio he number n. Pr of plans that h ivate Pension P arger growth rate when adde ave lan Bulletin, Abstract of 2005 Form automa 29 tic enrollment. Of more than d to a smaller account. percent of participants in the 2 The analysis is based on a sample of 6.0 million participants with account balances at the end of each year from 2003 through Other research suggests that EBR NoteI Issu : “F d un Not all participants are offered this investment option. See Figure 22. e ds Brief ” includ is r e mu egister tual ed in the U. fund008 databa smost 401(k) , bank S. c Patent and T ollectse ive participants do not make active change were in these p trusts radem , life iar ns k uOffice. rancel ans, which generally s I eS par SN: 0887 ate acco - un 13 ts 7X/90 , and a 0887 noffer eq y po s to thei ol -13 ed7X/90 $ . in uity funds, bon ver asset allocations during an stmen50+. t pr 2008. od 50 uct p d funds, mone rimarily invested in y y discerned by st Perspective. The analysis i udying the ca nVo clud l.es the 1.7 mi 9, no. 5, and ses of a change llion parti EBRI Issue Brief cipants w from either ith two or, no. 261 (September 2003). Available at fewer years o a 0 percent (none) or a 100 percent allocation to any other f tenure in 2008 and in plans offering com www.i pany stoc ci.org/pdf/ k as an inp vestme er09-05.pdf nt option. 0–2 >2–5 >5–10 >10–20 >20–30 >30 a smaller amou Figure 33, Asset Allocation Distribution GICs are guaranteed investment contracts. b nt—24.3 percent—likely reflecting diversified portfo of Participant Account Balance to Compan lios and ongoiny g contributions. Stock in 401(k) Plans 7 With Company Source: Tabula Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. tions from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. price appreciation/ depreciation plus income as a percentage of the original investment. b Age and tenure 1996 * Less than 0.5 perc 1997 groups are based on participant a 1998 ent. 1999 2000ge and tenure at year-end 2008. 2001 2002 2003 2004 2005 2006 2007 2008 funds. An account balance for each participant is the sum o Size of Account Balance f the participant’s assets in all funds. Plan balances are e Source: Tabulations form EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. S Note: “Funds” include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment product ource: Tabulations from EBRI 0 to 2 /ICI Participant-Directed Retirement Plan Data >2–5 >5–10 C >10–2 ollection Project. >20–3 primarily invested in >30 th b e secu GICs are guaranteed investment contracts. rity indicated. Salary Range Refere compared with 30 percent to 32 percent of recently hired outstanding a 5500 Ann nces Sources: Tabulations from ..................................................................................................................... mounted to 16 percent of the ual Reports. Washington, DC: U.S. the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project, Cerulli Associates. remaining account balance, o Department of participants in the other age g Labor, Empl n average, at oyee Benefits Sec yr ear-end 2008; oups in 2008 ( ................................................ urity Administration, February this is similar to the Figure 38). 58 because some 4 contribution be The year-end 2008 EBRI/ICI 401(k) database represents 24.0 million 401(k) participants. plans may havior does not appear to have offered, but no have been materia participant had take Years of Tenure lly affected by n out, a plan loan. It the bear marke is likely that this omission is s t in equities from 2000 throug mall as h 900 plans s On the other hand, investment returns of a g and RNote: Average owwww.ebri.org/pdf/briefspdf/0903ib.pd percentages m urveyed, 39.6 percent had a anda median 401 y not add up (k) loa to 100 perce n amoun utomatic enrollme nt because o ts are iven percenta f calcul fated roundi among nt in ng. ge produce larger dollar increases (or decreases) when par 2008, compared with 35.6 percent of plans in 2007, ticipants with 401(k) loans. about 17 th given year. For example, The allocati funds, Stock, by an ond bal . Bet Age w anced fu een N.................................................................................................................. ote: C year onds as lu - mn perce end investment o 2007 and Vang ntages may not add to 100 percent uard Grou year ptio -p 2009 reports that “despi end 2008, am ns. Another 25 perc because of roundi ong the 18.0 m ent of p te the substa ng. aillion 401(k) pa rticipants were in plans that ntial market volatility of 2008, only rticipants with ........................................... offer GICs and/ account balancor es 38 The Employee Benefit Research Institute (EBRI) is a nonpro Years of Tenure fit, nonpartisan, public policy research organization that does not Note: The EBRI/ICI 401(k) database contains 15.0 million 401(k) plan participants at year-end 2003 and 24.0 million at year-end the security indicated. 2008. Note: “Funds” include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment product Note: The EBRI/ICI 401(k) database contains 10.3 million 401(k) plan participants at year-end 1999 and 24.0 million at year-end 1100 13 Street NW · Suite 878 primaril 2008.y constructed as the sum of all 2008a. Availabl Note: "Funds" include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment product Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. e at www.dol.g participant bala ov/ebsa/pdf/2005p nces in the plan. Plan size is e ensionplanbulletin.pdf stimated as the sum of active primarily invested in participants in the Endnotes........................................................................................................................................................................ 60 Concentrated lifecycle fund year-end 2002 2002. Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. The consistent group consists of 6.0 million 401(k) plan participants with account balances at the end of each year from 2003 Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. level. use ranged from 31 percent of recent hires in their 20s holding more than 9 through 2008. 0 percent of their Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. The consistent group consists of 2.1 million 401(k) plan participants with account balances at the end of each year from 1999 through compounded on a larger asse invested in the security indicated. Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. t base. Washington, DC 20005 the security indicated. 16 [percent] of participants made one or lobby or take positi Note: Percentages may not add to 100 percent because of rounding. ons on legislative proposals. more portfolio trades or exchanges during the year.” Hewitt Associates (2009) Figure 34, More Recently Hired 401(k) Pl Note: The Note: The tenure variable is generally years working at current employer, and thus may overstate years of participation in the tenure variable is generally years working at current employer, and thus may overstate years of participation in the an Participants Hold Balanced Funds .................................................... 401(k) plan. 401(k) plan. .................38 Note: The Components may not add to 100 percent because of rounding. tenure variable is generally years working at current employer, and thus may overstate years of participation in the © 2009, Employee Benefit Research Institute -Education and Research Fund. All 401(k) plan. rights reserved. plan and, as 2008. Components may not add to 100 percent because of rounding. such, does not necessarily represent the total number of employees at the sponsoring firm. (202) 659-0670 www.ebri.org www.choosetosave.org ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 ebri.org Issue Brief • October 2009 • No. 335 30 44 12 42 16 27 45 20 50 38 39 54 32 17 31 37 21 11 26 57 22 47 40 24 18 56 52 55 53 46 35 51 36 43 41 28 14 8 7 9 ebr ebr ebr A ebr ebr ebr ebr ebr ebr ebr ebr ebr ebr ebr ebr ebr ebr ebr ebr ebr ebr ebr ebr ebr res i.o i.o i.o i.o i.o i.o i.o i.o i.o i.o i.o i.o i.o i.o i.o i.o i.o i.o i.o i.o i.o i.o i.o i.oe rg rg rg rg rg rg rg rg rg rg rg rg rg rg rg rg rg rg rg rg rg rg rg rg arc Is Is Is Is Is Is Is Is Is Is Is Is Is Is Is Is Is Is Is Is Is Is Is Ish su su su su su su su su su su su su su su su su su su su su su su su su re e B e B e B e B e B e B e B e B e B e B e B e B e B e B e B e B e B e B e B e B e B e B e B e B pori ri ri ri ri ri ri ri ri ri ri ri ri ri ri ri ri ri ri ri ri ri ri ri rte e e e e e e e e e e e e e e e e e e e e e e e from ffffffffffffffffffffffff • • • • • • • • • • • • • • • • • • • • • • • • Oct Oct Oct Oct Oct Oct Oct Oct Oct Oct Oct Oct Oct Oct Oct Oct Oct Oct Oct Oct Oct Oct Oct Oct the E o o o o o o o o o o o o o o o o o o o o o o o ob b b b b b b b b b b b b b b b b b b b b b b be e e e e e e e e e e e e e e e e e e e e e e e Br r r r r r r r r r r r r r r r r r r r r r r r R 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 I E 09 09 09 09 09 09 09 09 09 09 09 09 09 09 09 09 09 09 09 09 09 09 09 09 duca • No • No • No • No • No • No • No • No • No • No • No • No • No • No • No • No • No • No • No • No • No • No • No • No tion . 3 . 3 . 3 . 3 . 3 . 3 . 3 . 3 . 3 . 3 . 3 . 3 . 3 . 3 . 3 . 3 . 3 . 3 . 3 . 3 . 3 . 3 . 3 . 3 an 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 35 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 d R esearch Fund © 2009 Employee Benefit Research Institute 13 25 60 62 34 33 15 58 63 19 64 65 49 59 29 48 10 61 23 3 6 5 2 4 <$10,000 $10,000–$20,000 >$20,000–$30,000 >$30,000–$40,000 >$40,000–$50,000 >$50,000–$60,000 $ 0, 0 $ 0 0 0 > 6 0 0– 7 , 0 >$70,000–$80,000 >$80,000–$90,000 >$90,000–$100,000 >$100,000–$200,000 >$200,000 <$10,000 1–10 $20,000–$30,000 $10,000–$20,000 11–25 >$20,000–$30,000 30,000–$40,000 >$ 26–50 >$30,000–$40,000 >$40,000–$50,000 51–100 >$40,000–$50,000 101–250 >$50,000–$60,000 >$50,000–$60,000 251–500 >$60,000–$70,000 >$60,000–$70,000 501–1,000 >$70,000–$80,000 >$70,000–$80,000 1,001–2,500 >$80,000–$90,000 2,501–5,000 >$90,000–$100,000 >$80,000–$90,000 >$100,000–$200,000 5,001–10,000 >$90,000–$100,000 >$200,000 >10,000 1–10 >$100,000 All Plans $20,000–$30,000 11–25 0 0 4 0 26–50 >$3 ,00 –$ 0, 00 51–100 >$40,000–$50,000 101–250 >$50,000–$60,000 251–500 >$60,000–$70,000 501–1,000 1,001–2,500 >$70,000–$80,000 2,501–5,000 >$80,000–$90,000 5 ,001–10,000 >$90,000–$100,000 >10,000 >$100,000 All Plans Figure 33 Asset Allocation Distribution of Participant Account Balance to Company Stock in 401(k) Plans With Company Stock, by Age Figure A9 Figure A13 a,b Figure A11 Average Account Balances Among 401(k) Participants Present Percentage of Participants, 2008 Changes in Consistent Participants' Investment in Equity Funds, 2007–2008 Figure 26 a b Average Asset Allocation of 401(k) Accounts of 1999–2008 Consistent Group, by Participant Age From Year-End 1999 Through Year-End 2008, a by Age and Tenure Percentage of Account Balance Invested in Company Stock Percentage of participants Asset Allocation Distribution of 401(k) Account Balance to Equity Funds, by Participant Age a b b Figure 38 Percentage of account balances, 2008 Age Group Tenure (years) 1999 2000 2001 2002Figure 24 2003 2004 2005 2006 2007 2008 a,b Figure 32 Age Group Zero 1–10% 11–20% 21–30% 31–40% 41–50% 51–60% 61–70% 71–80% 81–90% 91–100% Percentage of participants, 2008 $12,958 $15,741 $19,229 $24,096 $29,002 $21,137 20s All $2,642 $5,831 Percentage of Account Balance Invested in $8,190 $8,847 Equity Funds Asset Allocation Distribution of Account Balance to Balanced Funds Among Recently Hired Participants, by Age Average Asset Allocation of 401(k) Accounts, by Participant Salary and Investment Options d 20s Asset Allocation Distribution of 401(k) Participant Account Balance to Balanced Funds, by Tenure 59.1% 11.3% 7.4% 6.0% 4.2% 3.4% 2.2% 1.1% 0.7% 0.5% 4.2% >5–10 $1,140 $3,004 $4,918 $6,426 GICs /Stable- Equity Lifecycle Non-Lifecycle Bond Percentage of Account Balance Invested in Equity Funds $10,332Money $13,430 $16,Company 602 $21,487 $26,012 $19,638 a,b Percentage in 2008 a b $13,560 $16,355 Percentage of Recently Hired Participants, c $19,130 $19,879 $30,186 a,b $38,565 2008$46,046 $57,880 $68,846 $49,116 30s All 30s 48.4% 14.5% 8.9% 7.1% 5.7% 4.3% 2.8% 1.6% 1.1% 0.8% 4.7% Percentage of account balances, 2008 b Age Group Age Group Zero Funds 1–10% Funds 11–20% Balanced Funds 21–30% Percentage of Participants, 31–40% Funds 41–50% Funds 2008 51–60% Value Funds 61–70%Stock71–80%Other 81–90% Unknown 91–100% Total Total in 2007 None 1–20 21–40 41–60 61–80 81–99 100 >5–10 $5,423 $9,440 $13,402 $15,689 $25,573 $34,092 $42,274 $54,352 $66,118 $47,420 d 40s 20s 44.5% 54.9% 16.4%2.4% 9.2% 2.8% 7.2% 4.6% 5.8% 4.4% 4.2% 4.8% 4.7% 2.9% 4.2% 2.0% 4.5% 1.4% 3.4%1.1% 9.3% 5.4% 20s 36.7% 12.4% 6.8% 10.0% 9.5% 11.5% 10.3% 2.5% 0.3% 100% >10–20 Percentage of Account Balance Invested in Balanced Funds $15,810 $18,268 Equity $20,715 Lifecycle$21,047 Non-Lifecycle $31,500 $Bonds 39,848 $47 Money ,145 $GICs 58,919/Stable-$69,675 Company$49,609 None 35.0 0.8 0.4 0.3 0.2 0.2 0.3 37.2 Percentage of Account Balance Invested in Balanced Funds $44,714 $46,180 $47,118 $44,406Figure 29 $61,650 $74,608 $85,273 $103,616 $120,134 $85,857 40s 30s b All 39.8% 3.5% 3.8% 5.3% c 5.2% 6.3% 6.2% 6.0% 6.3% 4.8% 12.8% 50s 42.8% 18.0% 9.0% 6.9% 5.7% 4.0% 2.8% 2.0% 1.5% 1.1% 6.2% 30s 54.1% 6.3% 6.1% 10.6% 4.7% 5.9% 9.8% 2.1% 0.5% 100% Age GroupSalary Zero 1–20 1–10% 0.6 Funds 11–20% 4.9 21–30% Funds 0.6 31–40% Balanced Funds Figure 28 0.2 41–50% 0.1 Funds 51–60% *Funds 61–70% Value Funds *71–80% 81–90% 6.5 Stock 91–100% Tenure (years) Zero 1–10% 11–20% 21–30% 31–40% 41–50% 51–60% 61–70% 71–80% 81–90% 91–100% >5–10 $14,545 $19,444 $23,722 $25,521 $39,160 $50,547 $61,303 $77,088 $92,100 $66,554 40s 36.5% 4.5% Average Asset Allocation for 401(k) Plan Participants Without 4.3% 5.6% 5.6% 6.8% 6.5% 6.3% 6.2% 4.5% 13.3% 60s 45.5% 17.7% 7.7% d 5.8% 5.2% 3.5% 2.4% 1.8% 1.4% 1.2% 7.9% 40s 48.7% 5.3% 6.9% 12.1% 5.6% 8.7% 10.1% 2.2% 0.4% 100% 21–40 0.6 2.2 5.1 0.9 0.2 0.1 0.1 9.2 >10–20 Plans Without Company Stock, GICs, $37,661 Percentage of 401(k) Plan Participants Without Equity Fund Balances $39,373 or Other Stable-Value Funds $40,777 $38,797 $54,678 $66,649 $76,730 $93,657 $109,059 $77,764 20s 0–2 36.5% 40.1% 3.5% 4.0% 4.9% 5.2% 3.7% 4.4% 2.2% 2.6% 2.4% 2.1% 2.8% 2.7% 1.8% 1.7% 1.7% 1.6% 1.4% 1.4% 33.7% 39.7% 50s 38.6% 5.9% 5.1% 6.3% 6.1% 7.0% 6.2% 5.6% 4.9% 3.3% 11.0% >20–30 Equity Fund Balances, by Participant Age or Tenure 50s 41–60 $73,695 37.8% 0.7 $73,243 5.8% 0.6 $71,8027.4% 3.4 $65,55614.2% 6.9 $87,753 7.3% $ 1.0 103,934 15.3% $116 0.2,119 9.6% $139 0.1 2.3% ,134 $159 0.3% ,149 12.9 100% $113,778 All 47.1% 15.8% 8.6% 6.8% 5.5% 4.0% 2.7% 1.8% 1.3% 1.0% 5.6% $20,000–$40,000 38.1% 19.7% 7.2% 21.1% 11.3% >2–5 45.4% 5.8% Who Have Equity Exposure, by Participant Age and Tenure, 2008 5.7% 5.7% 3.9% 3.7% 3.3% 1.6% 1.6% 1.5% 21.7% 30s 40.6% 4.3% 5.4% 4.8% 2.8% 2.4% 2.9% 1.9% 1.7% 1.4% 31.9% 50s All $76,597 $77,397 $76,504 $71,380 $94,429 $111,191 $124,328 $147,960 $169,024 $125,959 60s 44.9% 6.5% 5.3% 6.5% 5.7% 6.2% 4.9% 4.1% 3.5% 2.3% 10.1% Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. 61–80 0.6 0.4 0.7 3.9 7.0 0.7 0.3 13.6 60s 29.3% 5.2% 7.2% 16.9% 8.9% 22.5% 7.4% 2.4% 0.2% 100% >$40,000–$60,000 41.2% 17.2% 6.9% 20.6% 11.0% >5–10 50.7% 7.9% 7.0% 7.6% 4.2% Figure A5 2.9% 2.5% 1.5% 1.3% 1.3% 13.2% >5–10 $22,399 $27,940 $32,079 Percentage of account balances, 2008 $33,525 $48,662 $61,503 $73,854 $91,571 $108,752 $82,285 a 40s All 42.5% 41.4% 3.9% 4.5% 5.2% 4.3% 5.6% 4.8% 5.5% 2.7% 6.4% 2.4% 5.9% 2.9% 5.5% 1.8% 5.4% 1.7%3.9% 1.4% 11.7% 30.7% The analysis includes the 11.0 million participants in plans with company stock at year-end 2008. 81–99 0.4 0.3 0.2 0.5 2.7 4.9 0.4 9.4 All consistent group >10–20 $44,672 39.3% $47,194 5.4% $48,7827.1% $46,80214.2% $64,083 7.0% $77,715 15.2% $89,414 9.2% $108,370 2.3% $125,425 0.3% 100% $93,722 >$60,000–$80,000 43.4% 15.3% 6.7% 19.3% 11.4% >10–20 53.6% 10.1% 8.2% 6.6% 3.7% 2.8% 2.4% 1.4% 1.1% 1.0% 9.3% b Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Percentage of Participants Without Equity Funds >20–30 Asset Allocation to Equities Varied Widely Among Participants in the 2003–2008 Consistent Group $106,494 e $105,475 $102,326 $93,685 $122,337 b $142,831 $158,647 $188,122 $214,581 $158,359 Row percentages may not add up to 100 percent because of rounding. 100 0.7 0.2 0.2 0.3 0.5 0.7 8.5 11.1 50s 42.2% 3.7% 5.0% 4.6% 2.7% 2.4% 2.9% 1.8% 1.7% 1.5% 31.5% EBRI/ICI 401(k) Database >$80,000–$100,000 45.8% 14.9% 5.6% GICs /Stable- 19.8% 10.9% a Lifecycle Non-Lifecycle 37.4% 6.6%Bond Money 8.2% 12.3% 7.1% Company 15.2% 9.7% 2.4% 1.0% 100% >20–30 59.3% 10.5% 6.5% 5.5% 3.4% 2.5% 2.0% 1.3% 1.0% 0.9% 7.1% The analysis includes the 24.0 million participants in the year-end 2008 EBRI/ICI database. >30 $101,714 $101,065 $97,956 $90,895 $117,865 $135,681 $147,647 $172,456 $193,629 $145,842 Non-lifecycle balanced Combination of company stock a c c b Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. >$100,000 46.8% 11.8% 6.7% 22.0% 9.5% a b, c Total in 2008 Funds Total 60s >30 Row percentag 46.4% es may not add to 100 percent because of roundin 65.9% Balanced Funds 3.5% 38.6 8.3% 4.4% 5.4% 9.4Funds b g3.9% . 4.5%10.6Funds 2.4% 2.9% 13.0 Value Funds 2.2% 2.2% 11.81.8% Stock 2.6% 6.81.1% 1.5% Other 0.9% 9.71.4% Unknown 0.8% 1.4% 100.0 b 6.3% 30.3% 60s All $114,762 $112,126 $108,324 $99,539 $125,088 $140,273 $149,199 $168,746 $182,556 $137,337 Asset allocation distribution at year-end 2008 of 401(k) participant account balance to equities, by age; percentage of participants a Lifecycle funds as only and/or lifecycle funds, and/or Company stock and/or funds as only equity Company stock as only Figure 34 Row percentages may not add to 100 percent because of rounding. Percentages are dollar-weighted averages. Note: "Equity funds” include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment >5–10 $25,923 $32,176 $36,550 $38,016 $53,369 $66,726 product primarily invested in $78,372 $93,870 stocks. $107,405 $81,826 All 44.7% 11.9% 8.1% 19.8% 12.1% All 49.2% 7.2% 6.3% 5.8% 3.5% 2.8% 2.5% 1.5% 1.3% 1.2% 18.7% All Age Group Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. 40.2% 3.8% a 5.1% 4.4% 2.6% 2.3% 2.8% 1.8% 1.7% 1.4% 33.9% b a b >10–20balanced funds $48,744 $52,237 equity investment $53,933 $52,155 investment $69,840 $83,738 equity investment $95,081 $112,300 non-lifecycle balanced funds $126,068 $94,892 Age group is based on the participant's age at year-end 2008. Asset allocation by age group among the consistent d group of 2.1 million 401(k) plan participants with account balances at the end a More Recently Hired 401(k) Plan Participants Hold Balanced Fundsa Plans With GICs Sample of 18.0 million participants with account balances at year-end 2007 and year-end 2008. and/or Other Stable-Value Funds 20s 34.5% 24.4% 7.4% 9.7% 14.9% 7.6% 1.1% 1.3% 100.0% >20–30 $121,063 $119,873 $116,839 $107,529 Percentage of Account Balance Invested in Equities $135,782 $154,583 $166,933 c $190,661 $206,475 $154,563 of each year from 1999 through 2008. c b Percentage of Account Balance Invested in Lifecycle Funds Age Group Percentage of Account Balance Invested in Lifecycle Funds Percentages across the row may not add to total because of rounding. $20,000–$40,00 d >30 0 $171,708 $162,634 33.3% $153,31613.2% $138,336 8.5% $169,650 $184,157 9.1% $189,152 3.5% $208,757 28.7% $221,613 $167,003 c 30s 27.1% Percentage of recently hired participants holding balanced funds, 1998–2008 19.1% 10.7% 11.7% 16.8% 10.8% 2.6% 1.5% 100.0% Age Group A lifecycle, or target date, fund typically rebalances to an increasingly conservative portfolio as it approaches and passes the target date of the fund, which is usually included in the fund's name. c Zero 1–20 percent >20–40 percent >40–60 percent >60–80 percent >80 percent a Tenure (years) 20s Zero 79.1% 1–10% 11–20% 51.4% 21–30% 31–40% Figure 8.3% 27 41–50% 51–60% 4.4% 61–70% 71–80% 81–90% 15.0% 91–100% Percentages in column may not add to total because of rounding. All All $67,142 $67,411 $66,791 $62,280 $82,003 $95,777 $106,180 $125,430 $142,024 $104,734 Age Group Zero 1–10% 11–20% 21–30% 31–40% 41–50% 51–60% 61–70% 71–80% 81–90% 91–100% d >$40,000–$60,000 35.5% 10.9% 10.3% 8.6% 3.7% 27.5% 40s 19.1% 15.2% 12.4% 12.6% 22.5% 13.7% 3.8% 1.3% 100.0% Age Group 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 GICs are guaranteed investment contracts. 20s * Less than 0.05 percent. 13.8% 6.1% 6.9% 11.3% 20.3% 41.6% 0–2 30s 56.4% 74.3% 2.6% 2.6% 43.2% 2.7% 1.6% 7.4% 1.6% 2.0% 7.3%1.3% 1.3% 1.2% 16.3% 26.7% Source: Tabulations from the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Asset Allocation Distribution of 401(k) Participant Account e >$60,000–$80,000 38.6% 8.7% 11.0% 8.4% 3.3% 26.4% 50s 13.5% 12.0% 14.0% 13.8% 30.0% 12.9% 3.6% 0.9% 100.0% 20s a The year-end 2008 EBRI/ICI 401(k) database represents 24.0 million 401(k) participants. 53.6% 2.2% 2.4% 2.3% 1.4% 1.4% 2.0% 1.3% 1.2% 1.1% 31.0% 20s 27.0% 28.3% 27.1% 27.3% 32.7% 35.1% 38.9% 43.5% 48.5% 51.1% 63.6% Sum of shaded areas: 84.5 percent of participants. The analysis is based on a group of 2.1 million participants with account balances at the end of each year from 1999 through 2008. >2–5 40s 66.9% 70.0% 3.4% 2.8% 35.8% 2.7% 1.7% 6.8% 1.6% 1.6% 10.4%1.1% 1.1% 1.2% 17.0% 16.0% 30s 8.6% 5.5% 6.4% 11.4% 20.9% 47.2% >$80,000–$100,000 Bala 40.8% nce to Equity8.6% Funds, by Part 8.9% icipant Age, Ten 8.5%ure, or Salary 2.7% 27.0% b 60s 9.3% 8.9% 15.6% 15.6% 37.3% 9.6% 3.2% 0.7% 100.0% Note: "Equity funds” include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment product primarily invested in stocks. Note: "Funds" include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment product primarily invested in the security indicated. Age and tenure groups are based on participant age and tenure at year-end 2008. 30s 30s 29.0% 56.6% 31.0% 2.9% 28.3% 3.0% 26.5% 3.0% 33.1% 1.8% 36.2% 1.7% 39.8% 2.0% 42.8% 1.3% 47.9% 1.3% 54.2% 1.2% 59.6% 25.2% 50s 66.2% 29.3% 6.4% 13.3% 17.2% >5–10 73.2% 4.5% 3.1% 2.6% 1.7% 1.4% 1.3% 0.9% 0.9% 0.9% 9.5% d 40s 8.8% 6.9% 7.5% 12.5% 24.3% 39.8% >$100,000 42.5% 8.4% Percentage of partic 8.6% ipants, 20088.8% 3.8% 24.5% All 14.6% 12.3% 13.8% 13.9% 29.4% 11.6% 3.4% 1.0% 100.0% 40s 60s 30.5% 58.6% 33.6% 30.8% 21.7% 27.9% 33.7% 6.4% 35.7% 39.8% 16.3% 42.1% 46.6% 52.8% 14.2% 57.8% 40s >10–20 58.4% 77.6% 2.6% 5.0% 2.7% 2.9% 2.9% 2.3% 1.7% 1.4% 1.2% 1.6% 1.0% 2.0% 0.7% 1.2% 0.6% 1.3% 0.6% 1.1% 6.6% 24.4% All 39.8% 5.3% 12.6% 8.3% 4.9% 25.5% 50s 11.9% 10.2% 9.7% 17.5% 20.3% 30.5% PercFigure A10 entage of Account Balance Invested in Equity Funds Tenure (years) 50s All 30.9% 70.0% 34.9% 32.1% 36.8% 29.2% 33.9% 7.1% 35.5% 40.3% 10.1% 43.3% 47.8% 53.4% 16.0% 58.0% >20–30 80.9% 5.1% 2.7% 2.0% 1.3% 1.0% 0.8% 0.6% 0.5% 0.5% 4.7% 50s 57.9% 2.6% 2.4% 2.8% 1.7% 1.6% 2.0% 1.2% 1.2% 1.2% 25.4% Plans With Company Stock 60s 18.3% 13.3% Figure 11.9% A12 16.4% 14.7% 25.4% Zero 1–20% >20%–80% >80% 0–2 34.6% Percent Change in Average Account Balances Among 401(k) Participants 21.9% 10.6% 11.8% 14.6% 5.1% 0.9% 1.0% 100.0% Figure A14 Tenure (years) >30 84.1% 4.4% 2.2% 1.6% 1.0% 0.8% 0.7% 0.5% 0.4% 0.4% 3.9% 60s 28.4% b 34.9% 33.2% 29.1% 30.2% 30.7% 36.3% 41.6% 45.5% 50.1% 53.9% $20,000–$40,000 36.2% 7.4% 2.5% 13.3% a 16.9% b 21.5% 60s All consistent group >2–5 61.7% 29.2%All 2.4% 18.4% 1.9% 11.5% 2.3% 41.4% 13.6% 1.5% 8.8% 18.0% 1.4% 34. 1.7% 6.9% 3% 1.0% 1.8% 15.6% 1.0%1.1% 1.1% 100.0%23.9% 11.7% 8.7% 8.6% 14.3% 20.7% 36.0% Asset Allocation to Equities Varied Widely Among Participants in the 1999–2008 Consistent Group Present From Year-End 1999 Through Year-End 2008, Changes in Consistent Participants' Investment in Bond Funds, 2007–2008 by Age and Tenure All 0–2 69.5% 78.5% 3.9% 2.8% 51.8% 2.4% 1.5% 9.0% 1.4% 1.3% 4.2% 0.9% 0.9% 0.9% 13.5% 14.5% All 28.9% 31.3% 29.1% 27.4% 33.0% 35.4% 39.3% 42.8% 47.6% 52.7% 59.9% >$40,000–$60,00e0 34.8% 8.1% 4.7% 19.7% 11.8% 18.0% >5–10 21.2%Age Group 15.0% 13.7% 15.3% 22.1% 9.4% 2.2% 1.1% 100.0% a b, c EBRI/ICI 401(k) Database a All b 56.5% b 2.6%12.4% 2.6% 6.1% 2.7% 1.6% 7.0% 1.6% 2.0% 13.1% 1.3% 23.8% 1.2% 1.1%37.5% 26.8% >2–5 Asset allocation dist 72.6% ribution at year-end 2008 of 38.5% 401(k) participant acc 8.4% ount balance to equities, 6.8% by age and percentage of18.8% participants Percentage of participants Age Group Tenure (years) 1999–2000 2000–2001 2001–2002 2002–2003 2003–2004 2004–2005 2005–2006 2006–2007 2007–2008 1999–2008 >$60,000–$80,000 35.6% 8.1% 5.6% 16.2% 10.8% 20.6% 20s 54.9% 5.3% 27.1% 12.7% Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. >10–20 15.8% 12.2% 13.7% Percentage of Account Balance Invested in Non-Lifecycle Balanced Funds 14.4% 26.5% 12.4% 4.2% 1.1% 100.0% Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. a 20s>5–10 All 66.5% 120.7% 40.5% 29.1% 8.0% 46.5% 6.7% 21.5% 22.2% 10.6% 25.3% a 20.4% -27.1% 20.0% 700.0% 30s 39.8% 7.3% 35.3% 17.6% The analysis includes participants with two or fewer years of tenure in the year indicated a >$80,000–$100,000 36.0% 7.2% Percentage of Ac 5.7% count Bal 13.8% ance Invested in Equi 11.0% ties 23.0% Percentage of Account Balance Invested in Non-Lifecycle Balanced Funds Equities include equity funds, company stock, and the equity portion of balanced funds. “Funds” include mutual funds, bank col >20–30 10.4% 10.2% 13.6% 12.7% 33.8% lective trusts, life insurance separate accounts, and any pooled investment product. 14.6% 4.3% 0.9% 100.0% Tenure (years) Zero 1–10% 11–20% 21–30% 31–40% 41–50% 51–60% 61–70% 71–80% 81–90% 91–100% >5–10 163.5% 63.7% 30.7% 60.8% 30.0% 23.6% 29.4% 21.1% -24.5% 1622.6% b 40s Percentage of Account Balance Invested in 36.5% 8.8% Bond Funds 37.0% 17.8% >10–20 d 63.1% 21.8% 6.9% 15.6% 18.8% "Balanced funds >$100,000 " include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment produc 37.8% 6.0% 7.3% 13.2% t primarily invested in a mix of equities and fixed-income securities. 10.4% 19.4% Age Group Zero 1–20 percent >20–40 percent >40–60 percent >60–80 percent >80 percent primarily invested in the security indicated. >30 6.6% 7.8% 13.6% 14.4% 40.4% 13.3% 3.8% 0.7% 100.0% Age Group Zero 1–10% 11–20% 21–30% 31–40% 41–50% 51–60% 61–70% 71–80% 81–90% 91–100% 30s0–2 All 81.3%20.6% 50s 2.7% 17.0% 3.4% 3.9% 2.2% 38.6% 51.8%1.0% 11. 27.8% 0%0.8% 19.4% 0.8% 36.1% 25.7% 0.5% 14.318.9% %0.4% -28.7% 0.3% 6.6% 262.2% >20–30 59.8% 13.6% Percentage in 2008 6.0% 23.7% 16.5% b d All 34.8% 4.8% 5.7% 18.9% 12.0% 20.5% Participants include the 6.0 million 401(k) plan participants with account balances at the end of each year from 2003 through 2008. Asset allocation is as of year-end 2008. 20s 14.8% 7.8% 8.7% 9.6% 15.2% 43.9% >5–10 74.1% 60s 42.0% 17.1% 44.9% 63.0% 11. 33.3% 8% 24.0% 30.9% 28.6% 12.421.6% % -28.3% 774.4% All >2–5 14.6% 75.8% 4.1% 12.3% 3.9% 13.8% 3.6% 13.9% 2.3% 29.4% 2.1% 1.7% 11.6% 0.6%3.4% 0.5% 1.0%0.4% 100.0% b5.2% 20s 80.7% 2.6% 3.3% 1.8% 0.8% 0.7% 0.8% 0.5% 0.4% 0.3% 8.2% c >30 55.7% 9.5% 4.7% 28.2% 13.3% None d 1–20 21–40 41–60 61–80 81–99 100 Total in 2007 Figure 35 >10–20 15.5% 13.4% 1.6% 49.7% 26.5% 18.3% 25.0% 18.3% -28.8% 213.8% Row percentages may not add to 100 percent because of rounding. Plans With Company Stock and GICs and/or Other Stable-Value Funds 30s Tenure (years) 6.6% 5.1% 5.7% 10.8% 19.8% 52.1% Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. >5–10 74.6% 5.3% 4.7% 5.4% 2.7% 1.5% 1.2% 0.6% 0.4% 0.4% 3.3% d 30s All 81.2% 70.0% 3.0% 3.5%36.8% 2.3% 1.0% 7.1% 0.8% 0.8% 10.1% a 0.5% 0.4% 16.0% 0.3% 6.2% 40s a All None 3.3% 65.1 2.0% 2.6 -5.8% 1.138.8% 0.6 21.0% 0.3 14.3% 21.5% 0.3 15.9% 0.9 -28.5% 70.9 92.0% Age group is based on the participant's age at year-end 2008. 0–2 54.5% 4.7% 26.4% 14.4% $20,000–$40,000 33.2% 7.8% 5.6% 7.7% 2.8% 24.4% 17.4% A lifecycle fund typically rebalances to an increasingly conservative portfolio as it approaches and passes the target date of 40s Many Re 7.4%cently Hired 40 6.7% 1(k) Plan Participa 7.1%nts Hold Lifecy the fund, which is usually included in the fund's name. 12.3% cle Funds 23.4% 43.1% >10–20 73.2% 7.1% 6.0% 4.6% 2.2% 1.6% 1.3% 0.7% 0.5% 0.4% 2.5% e >5–10 33.7% 22.0% 7.6% 53.4% 29.1% 21.3% 25.7% 19.5% -27.7% 357.6% b Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. >2–5 44.0% 6.5% 34.2% 15.3% The year-end 2008 EBRI/ICI 401(k) database represents 24.0 million 401(k) participants. 1–20 1.0 11.2 3.3 0.3 0.2 0.1 0.1 16.2 40s GICs are guaranteed investment contracts. 81.7% 2.6% 3.5% 2.5% 1.1% 0.8% 0.9% 0.5% 0.4% 0.2% 5.7% >$40,000–$60,000 29.9% 6.1% 6.1% 6.1% 2.6% 28.3% 19.0% a >10–20 4.5% Pe 3.6% rcentage o -4.9% f recently h 40.9% ired particip 21.9% ants, 2006,15.1% 2007, and 20 22.1% 08 16.4% -28.7% 106.5% >20–30 50s 75.7% 7.4% 11.2%4.6% 3.8% 10.7% 2.2% 9.4% 1.5% 1.1% 16.9% 0.7% 0.4% 19.6% 0.3% 32.2%2.3% Components may not add to the total in the first column because of rounding. c >5–10 35.4% 9.1% 39.0% 16.6% 21–40 0.4 0.5 4.6 1.4 0.2 * 0.1 7.1 Row percentages may not add up to 100 percent because of rounding. Percentages are dollar-weighted averages. >$60,000–$80,000 30.4% 6.5% 8.5% 6.6% 3.7% 24.2% 17.6% b >20–30 -0.6% -2.0% -8.7% 33.9% 18.4% 11.7% 19.8% 14.4% -28.5% 54.4% 50s 81.9% 2.4% 3.5% 2.5% 1.1% 0.9% 0.9% 0.5% 0.4% 0.3% 5.6% c A lifecycle fund typically rebalances to an increasingly conservative portfolio as it approaches and passes the target date of >30 60s 79.5%>10–20 5.6% 18.3%3.8% 3.1% 30. 14.8% 6% 1.9% 11.11.7% 8%1.3% a the fund, which is usually included in the fund's name. 1.1% 39.9% 15.2% 0.6% 17.8%0.4% 14.1% 0.3% 25.9%2.3% The analysis includes the 9.9 million participants with no equity funds at year-end 2008. Holding B 41–60 alanced F0.1 unds 0.1 0.2 Holding Lifecycl 1.5 e Funds 0.5 * Holding Non-Li 0.1 fecycle Balanced F 2.5 unds 50s All 1.0% -1.2% -6.7% 32.3% 17.8% 11.8% 19.0% 14.2% -25.5% 64.4% >$80,000–$100,000 32.4% 6.5% 8.0% 6.9% 3.7% 22.1% 17.8% b >20–30 33.5% 14.2% 37.7% 14.7% Note: “Funds” include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment product primarily invested in the security indicated. The tenure variable is generally All 77.1% 5.0% 4.4% 3.8% 2.0% 1.4% 1.2% 0.6% 0.4% 0.3% 3.9% 60s All consistent gro82.7% up 2.2% 11.4% 3.2% 2.1% 9.6% 1.1% 8.7% 0.9% 0.9% 14.1% 0.5% 19.6% 0.3% 0.2%36.7% 5.7% Note: “Funds” include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment product primarily invested in the security indicated. >5–10 61–80 24.7% * 14.8% * 4.5% * 45.2% 0.1 26.4% 0.5 20.1% 24.0% 0.3 18.8% * -24.3%0.9 267.4% Age Group 2006 2007 2008 2006 2007 2008 2006 2007 2008 >30 43.1% 14.0% 31.4% 11.5% >$100,000 34.1% 5.9% 7.9% 7.5% 3.5% 20.4% 17.6% years working at current employer, and thus may overstate years of participation in the 401(k) plan. e Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. The tenure variable is generally years working at current employer, and thus may overstate years of participation in the 401(k) EBRI/ICI 401( >10–20 k) Database 5.6% 3.4% 12.4% -4.1% 6.1% 36.9% 21.3% 7.0% 15.1% plan. 13.1%21.2% 15.7% 23.8% -25.3% 37.5% 109.8% 81–99 * * * * * 0.3 0.1 0.5 All 81.3% 2.7% 3.4% 2.2% 1.0% 0.8% 0.8% 0.5% 0.4% 0.3% 6.6% a All Salary 33.2% 5.3% 7.1% 7.1% 3.1% 25.4% 15.5% 20s 48.5% 51.1% 63.6% 29.4% 31.7% 46.5% 22.5% 21.8% 19.3% The analysis includes the 24.0 million 401(k) plan participants in the year-end 2008 EBRI/ICI database. >20–30 -1.0% -3.0% -8.4% 30.6% 16.8% 11.1% 18.6% 14.1% -26.2% 48.7% Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. 100 0.1 * * * * 0.1 1.7 1.9 Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. $20,000–$40,000 49.4% 9.7% 30.3% 10.7% b Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. >30 -0.6% -3.1% -7.2% 29.7% 15.1% 8.8% 16.8% 12.3% -24.7% 43.4% 30s Row percentages may not add up to 100 percent because of rounding. 47.9% 54.2% 59.6% 28.5% 35.1% 43.5% 22.5% 22.2% 18.8% a a c Equities inc a lude equity funds, co> mpany $40,0 s 00– tock, and the equity portion $60,000 of balan3 ced funds. “Fu 9.7% nds” include mutual funds, bank 11.5% collectiv 35.4% e trusts, life insurance separate ac 13.4% counts, and any pooled The analysis includes the 4.0 million recently hired participants (those with two or fewer years of tenure) in 2008. Total in 2008 66.8 14.5 9.2 3.9 1.6 1.1 2.9 100.0 c 60s Minor investment options are not shown; therefore, row percentages will not add to 100 percent. Percentages are dollar-weighed All -2.3% -3.4% -8.1% 25.7% 12.1% 6.4% 13.1% averages. 8.2% -24.8% 19.7% A lifecycle fund typically rebalances to an increasingly conservative portfolio as it approaches and passes the target date of the fund, which is usually included in the fund’s name. 40s investment product prim 46.6% arily inve 52. sted in t 8% he security57. indicated. 8% 27.4% 34.2% 41.8% 21.3% 21.4% 18.3% b >$60,000–$80,000 32.5% 12.3% 40.6% 14.7% b Row percentages may not add up to 100 percent because of rounding. Salary information is available for a subset of participants in the EBRI/ICI database. Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. >5–10 24.1% 13.6% 4.0% 40.4% 25.0% 17.5% 19.8% 14.4% -23.8% 215.7% Note: “Funds” include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment produc b >$80,000–$100,000 28.0% 12.4% t primarily invested in the security indicated. The Tenure variable is 43.8% 15.8% c c a Participants include the 2.1 million 401(k) plan participants with account balances at the end of each year from 1999 through 2008. Asset allocation is as of year-end 2008. 50s 47.>10–20 8% 53. 7.2% 4% 3.2% 58.0% -3.3% 28.1% 33.9% 34.9% 19.9% 42. 13.5% 2% 18.1%21.4% 12.3% 21 -24.7% .2% 94.7% 18.1% A lifecycle fund typically rebalances to an increasingly conservative portfolio as it approaches and passes the target date of Sample of 18.0 million participants with account balances at year-end 2007 and year-end 2008. the fund, which is usually included in the fund’s name. A lifecycle fund typically rebalances to an increasingly conservative portfolio as it approaches and passes the target date of the fund, which is usually included in the fund’s name. >$100,000 23.1% 12.5% 47.4% 17.1% generally years working at current employer, and thus may overstate years of participation in the 401(k) plan. c d b >20–30 -1.0% -2.5% -8.0% 26.3% 13.8% 8.0% 14.2% 8.3% -25.1% 27.7% Row percentages may not add to 100 percent because of rounding. GICs are guaranteed investment contracts. Percentages across the row may not add–total because of rounding. 60s 45.5% 50.1% 53.9% 26.1% 32.1% 38.4% 19.8% 20.3% 17.3% Note: “Funds” include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment product primarily invested in the security indicated. Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. c d >30 -5.3% -5.7% -9.8% 22.6% 8.6% 2.7% 10.4% 6.2% -24.6% -2.7% Age group is bas Percentages in column may not add–total because of rounding. ed on the participant's age at year-end 2008. a Note: Row percentages may not add to 100 percent because of rounding. "Equity funds” include mutual funds, bank collective All All All 47.6% 52. 0.4% 7% -0.9% 59.9% -6.8% 28.3% 31.7% 33.8% 16.8% 43. 10.9% 6% 18.1%21.9% 13.2% 21 -26.3% .7% 56.0% 18.7% e * Less than 0.05 percent. The year-end 2008 EBRI/ICI 401(k) database represents 24.0 million 401(k) participants. trusts, life insurance separate accounts, and any pooled investment product primarily invested in stocks. Source: Tabulations from the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project. Sum of shaded areas: 90.3 percent of participants. a The tenure variable is generally years working at current employer, and thus may overstate years of participation in the 401(k) plan. a The analysis is based on a group of 2.1 million participants with account balances at the end of each year from 1999 through 2008. A lifecycle fundNote: "Bond funds” include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment pr typically rebalances to an increasingly conservative portfolio as it approaches and passes the target date of the fund,oduct primarily invested in bonds. which is usually included in the fund's name. b Age and tenure groups are based on participant age and tenure at year-end 2008. Note: The analysis includes the 4.0 million recently hired participants (those with two or fewer years of tenure) in 2008, the 3.8 million recently hired participants in 2007, and the 2.8 million recently hired participants in 2006. "Funds" include mutual funds, bank collective trusts, life insurance separate accounts, and any pooled investment product primarily invested in the security indicated. Percentage Percentage in 2007 in 2007

Volume 335

Pages 68

EBRI Issue Brief

Jack VanDerhei

Sarah Holden

Luis Alonso