Key Findings:
Drawing from the EBRI/ICI 401(k) database, this paper follows a group of consistent 401(k) plan participants over a six-year period. A few key insights emerge from looking at the 0.7 million consistent 401(k) plan participants who were fully invested in target date funds (TDFs) as of year-end 2016:
- Most consistent 401(k) participants who were fully invested in TDFs remained fully invested. Among participants who were 100 percent invested in TDFs at year-end 2016, 85 percent remained fully invested in TDFs through year-end 2022.
- When moving away from TDFs, participants in their 60s were the most likely to completely exit TDFs. In contrast, when moving away from TDFs, younger participants were more likely to reduce their TDF holdings rather than exit completely.
- When moving away from TDFs, older 401(k) participants typically made larger adjustments to their equity allocations than younger participants. For example, among 401(k) participants in their 60s who moved away from TDFs, 47 percent increased their equity allocation by 20 percent or more and 32 percent decreased their equity allocation by 20 percent or more.
Figure 2 Figure 5 Figure A4 401(k) Participants Tend to Remain in Target Date Funds Across All Tenure Groups, Older Participants Are Most Likely to Completely Exit Target Date Funds Figure A2 Participants Who Left a Full-TDF Allocation Share of consistent 401(k) participants with a full-TDF allocation, year-end 20 Fi gure 3, Mid-Ten Shur ared e P ofartic con ip si ants ste Ar nt e 40 Mo 1(sk) t Likely to R participae nmain ts in Fu thlly eir In 6v 0est s a ed t in yea Targ r-en ed t Date 201 Fund 6 whs o .............................. had a 7 end Fi ( had Plan Sponso Appen Olde References Copeland, C Thi Fi ggu ure 6 s be 2016 rpattern r p e en artic 6ill )dix to . ava ust Si ip rai o r y milarly a r il Council ear f ates g abl nts T . 201 DF -e w e thi since nd rete ,er of 9. pse artici 2022, res “Com Am th ntio 1e m 9 upan erica. 9 ln ting 4, paring Ass os amo 55 ts they t li i di p 20 n n s kely to ercent th g 401( p quickly 0ers 3. eir et A ion 46 50 he exi k) th An illocation b sn as ld p t in ecam som articip eq itially nual suet all ities e e T ants Sur h Befor the m D oc a ed F ntirely a vey may re ation sa e and os much an of t p d acro 36 Profit opul fter A fle n fter a p s ct arr ercen s m ar a co a Sharin ower ov ge QDIA Rollover ing tmbination grou (0. di g a , s 7 like a way trib ps nd mi From ly by uti lli 4 frb 01 o on om on: 100 document ecause o f ( )40 k factor a were ) 1Plans: f(ull k) f s pe - P f, TD u ing th including w la ll rc - R F allocat ns t ei TD eefl how nt r i F inves ecti o Ind ntuit w ere es est ng 2 ion. Ov ive, a iv imate hen tor id 00 tim ua s 2 ge at d l P ated erall, 8 - lan base year to-d Recent Hires Include a Range of Worker Ages Sarah Hol About the den isEBRI/ICI 401 senior economic ad (k vis) erDatabase at the Invest ment Company Institute (ICI). Emily Williams is former senior A Closer Look at 401(k) Plan Target Date Fund Investors’ Share of consistent 401(k) participants who had a full-TDF allocation at year-end 2016 by hire 15 30 full-TDF allocation at year-end 2016 by hire year/years of tenure pe end 2016 invest invest have allocations rcebe nt ment ment a tw of Retireme Experi ( full een to Fi de g p eq ure 1). - 4 proach. cis TD ence 0 uity ions nt Ac F partici percent . C (wer eq hicag counts ue ity pa an to: ypically nts fun d ,” P 6 e lan EB ds, 0xit pe RI S compa ed ma rc ponsor Is e ent de sq ue u ,ny sto o ities ent how Brie f Cou the the f, n nci ir ck40 irely , and o l y. 4 of e 1( America. vo 9 kin 5 ( )the lve the acco Nov dest year in ov unts inv em imat er time beed r)w est W eq , and the hich as ed uity hin in they left p gt eq ort on, DC: age uio ities n o a f of w f ul the T Em hi lDFs a -le full TD 401 plo F yee B nd n ( al y k) locatio i nv pl on ene an est – p targ n fit Re ed artic ( in Fi et gu sTD ip earch dat ra e 8) F nt e s.. After . to def Th In 2 econom e allo ine qua 024, 59 catio ist li fp ied defa n to equiti at ercent ICI. of U ult inve Steve es in .S.n stment a househ TD Bas Fss i va s ol ass ries wi lternat ds ow istant direct th th ning tra ives (QDIAs), e funds’ targ diti or of onal IRAs i see Hol reti et dates. rement r ndicated tha den 100% an Fo esear d r Chism 2016. Fo TDFs c t their traditi h , iat IC nvestors w I. Crai r informatio onal IRAs co ere a g Cop ssu eland is t med n ntaine on the regu to be in a he director d rollo fu lati vers nd ons . of Agnew, Julie, Pierluigi Balduzzi, and Annika Sundén. 2003. “Portfolio Choice and Trading in a Large 401(k) Plan.” 96% Fi Account B gure 4, Older Partici alance pants Are Mos A t Likel sse y to Compl t Allo etel ca y Exit tions Ov Target Date er Time Funds ................................ ...................... 9 year/years of tenure 93% The EBRI/ICI project is unique because of its inclusion of data provided by a wide 91% variety of plan recordkeepers, bal mo However, t anc ving ed P aInst f e way ru c hat nds e itute nf rose from trom a ) gs . Avail e hif a ot f ed fC ull abl o f- n 5 or TD se is p at partici F tercent e al n ww t locatio 40 pan w.e 1 of (k) ts bri.org n, ful P w 41 a l-rho were TDF in ti cpe /d ipa ocs rc nent v ts/ est d ful b efaul y remai ors l -H TiDF as i re tn - ned in s Y th ource eeir a of r/Y year that 20 / eeb a sr s ri to - ra -o end 2016, iss f17 ng T ue e e, pe n-u w brief/e rc re h ent ile a ver n 2 do bri_ib 8 A f full sus g pe e,a rce - _4 Y s TD of e9 nt a F inves 5_a r th -in Ee n crea ss d yetallocatio ear 2 tors 0 s1 ed 6 th i th n ey th eir equ fi n eir rs - t60s exi ity . T tedo a who around When s se targe urv (QDIAs eyed t date was n ), about the see U.Seares . rol Dep lov t to artmen er decisi their 65th t of L on, ab man birthday or, Empl y indicated t . Al oyee Benef locatio han to equiti t they its Security rolled o es in Administrati ver TDto Fs co is ass nsol on 2007 a umed idate a to 88% ssets a nd va 200 ry wi nd man 8. See a th invy indicat estor age. The lso Butri ed the ca, wealAm th bene erican fits Ec research onomic R at t eview he Em 93( p1 loyee ) (Marc Bene h): fit Res 193-2 ear 15ch In . Availab stitut le eat (EBRI) . Thanks to Adam Bens 86% imhon, EBRI 85% Moved to a 1–99% TDF allocation Pension Protection Act of 2006 (PPA) For ins Plan Sponso 40 1(k) plan d tance, r esign ha d Council ifferences i of s Am also n t erica. evolv he timi e 20 dng of 0 s7. ignif 5t0th icantly over hese i Annitial nual Sur d th ecis e vey past ions may of f Profit ew dec help Sharin ades expl g with ai and n the var 401 iation goal (k) Plans: o in TD f helpin F Refl pe g ecti rs mo ist ng 2 re ence w00 ork ac 6e P ros rs lan ss av e permitting the analysis of the activity of participants in 401(k) plans of varying sizes—from very large corporations By Sarah Holden, ICI; Emily Williams, ICI; Steven Bass, ICI; and Craig Copeland, EBRI equity porti Dworak full exp have z desire to -os TD ur ero i F pos -e Fi mak 7nov19. she to m on for TD nve iti r, e inve on. an ore than stm pdf d P ent stment ch . Fs was es er in un 60 e 201 q p ui ercent an 5, for mo ties, timated using t ges wa the . Th 4 s a re det e 0re 1 m (mainin ot k) partici ails o he indu ivating f n h g stry 3 pan ow acto 1 the P pe av t rw rcent . See Hol erage ould PA and en requity pe have edden uced allo s an uing D their equ r d S cated centag chras epartmen none e f s ity ho 202 or t of he 5. tld of La their 40 ass in gs to igned bor regul 1( 40 k T )DF p b ercent alance atio , which was ns a or l to equi ffected ess, ty plan Fi gure 5, Data Com Acros pl sian Allce an Tenure d I T Dire Groupcto s, Ol r, and Kyle der Participa Bed nts u, EBRI Are Mos Res t Likely earch Ass to Compl ociate, for etely dExit T ata taar bu ge lations t Date Funds . This Is s ............. ue Brief 10 www.aeaweb.org/articles?id=10.1257/000282803321455223. Left a Full-TDF Allocation (Total) 5 May 28, 2026 • No. 658 and tenure invest gro Experi up for s. retireme ence Longer . Chicag -nt. tenE ur o: mployers ed P lan 401(k Sponsor ) ( or part plan icip Cou sants ponsor nci l at yea ofs America. )F have incr irg -en ure d 2016 4 easin (th glos y a e dop with te more d auto than -enro 1llmen 0 years t to ofboos job ten t ure) to small businesses—with a variety of investment options. Hire Year / Years of Tenure fun structures including 1 calcul ds, ated u targ M.o v 2 et sin e p ddate fun g the ercent to a 0 Mornings % who ds, no TD h F e a n-target tar L ld llo n co a ifecycle Al t equiti ion dat es elo b at all catio alance . n In 401(k d dexes (see Morning fun ) ds, or com participants pan iny st the star 20 ock ir 6. 22). 0s w ere distributed across a wide range of Figure 1 was written with assistance from the Institute’s research and editorial staffs. Any views expressed in this report are 16 Copeland 2 Hir01 e 9 Ye expl ar ores how ass< et allo 1986cation 1986–1996 changes whe 1996–2006 n 401(k) pl 2006–2011 an balances are ro 2011–2014 lled over to 2014–2016 IRAs. 6 Figure 6, Participants Who Exit Target Date Funds Tend to Adjust Their Allocation to Equities ................................... 11 be Ho partici ga lden, n pation th Sarah eir em rates , Steven ploy in 40 ment B1( as bke s),fore an plans dth Crai e pas and g h Co sage av pe e lan o com f d. 20 thmo e PPA 24 nlya des ,. “ a perio 4ig 01(k) nate d whe P d la TD n A n Fs T s s DFs as et All the wer ocat de e fau n ioot n, lt i as Acc nves wi ount de tm ly B ent of al fere ances, for automa d in and Lo 401(k tical ) an ly Older P<1 ar9 ti 8c 6ipan1986–1996 ts Are Mos1996–2006 t Likely to C 2006–2011 ompletely2011–2014 Exit Targe 2014–2016 t Date Funds Banerjee, Sudipto, Louisa Schafer, Taha Choukhmane, and Tim de Silva. 2025. “Age, evolving allocation preferences, allocations to equities both when fully inv 36 est % ed in TDFs and after. 21% those of the author an Mad jo sr ho ity uld o not f Co be n s as is cribe tent d P to t arhe tic of ipficers, trus ants Holte d e T sa , or other rget Da spo te F nso un rs d of s EBRI, Employee 3 Figure 6 Altho The P ugh PA inclu this a Year pproach misses some va ded provisi s of Tenur ons that h e > elped red 30riation in i > uce k 20 ndividua to ey b 30arrier l T >1DF choi s to bro 0 to 20ce, ader the e >5 retirement plan p to rro 10 r is unlikely to be signifi >2 toartici 5 patio 0 n (an tocant. At yea 2 d improA ved lrl-end Plan Sponsor Council of 7 America. 200 238. 51st Annual Survey of Profit Sharing an 24 d 401(k) Plans: Reflecting 2007 Plan 17 Sources and Types of Data >30 Full>2 -TD 0F t o in 20% v 3 e0 stors >10 to 20 >5 to 10 >2 to 5 0 to 2 Introduction pl enrolle ans—d partic eith AAct geer ivity as ip i d ants n 20 ef ault . 2 In 2.” inve a 20% Idd CI R sitm tion to servi esear ents ch P or as ers ng as pe options in ctiv defau e 30 lts th , n , e inves T o. DFs 3, a hav n tm d e ent EBRI also lin Iss eup becom ue Brief . e As a a ,s n tan resu o. dard optio 606 lt, longer (April- n wi )t. Ava enu thin red partici ila A bl ma lle at ny pla pan n ts The analysis w Share of consistent 401(k) ill tend to overestimate persistence in T participants who had a ful DF investing. First, t l-TDF allocation at y he analysis does n ear-end 2016 by ot observe changes between and the case for personalized solutions.” In the Spotlight (July). Baltimore, MD: T. Rowe Price. Available at Percentage of consistent participants holding target date funds by age, year-end 2016 Benefit Research Institute-Education and Research Fund (EBRI-ERF), or their staffs. Neither EBRI nor EBRI-ERF Fi gure 7, Younger Participants Who Left a Full-TDF Allocation Were More Likely to Maintain Similar Allocation to Participants Who Exit Target Date Funds Tend to Adjust Their Allocation to Equities investmen 2018, 88 percent t o 20s utcomes) of TD . For ex F-holding partici ample, it cl pan arifi tsed legal un in the EBRI/ cert ICI datab ainties around ase held a s au 11 tomatic enrol ingle age14 -appropriate TDF lment, enabli 18ng e (see Ho mployers 16 lden, to enroll at year-end 2016 Experience8 . C hicago: Plan Sponsor Council of America. invest who were For a majo ment l 20s ww fully rity w.ici.org ineup of inves partici s. /f te Indeed, id les/20 pan in T ts DFs at 24/p , the by year er3 a the djust 0 -participant en - be 03 d 2 ments .gi pdf 02 nni 2, ang of to th nd 85 age and hire year w pe the ww.e eir rce al observ nt locatio bri.org of 4ation 0 ns to /d 1( ocs 7 k /years of tenur )p /d eq pla eriod ef uities a ns in ault are -stource/ he fter more l 17 EBR elea pb I/ICI 40 ving ike rief ly to a s/ full 23 ehav 1( bri_ -kTD )e i b_60 dactiv F atabas allocatio 6_ ely 10 ke sele -xsec on ff er cted w -e ere d tnot hat TDFs (whether active or passive remapping). Second, some full-TDF investors may have already exited a full-TDF allocation Target date www.trowe funds (TD priFs) ce.co plm/conte ay a central nt/dam role i /trp n th -ec e l/g U.lo Sbal . retirement /en/ipc/ass sys ets tem /trpi as s- ta rpa/202 widesprea 5/q3 d /a inv geest -evolv ment o ing-ption allocat in 4 ion01 - (k) lobbies or takes positions on specific policy proposals. EBRI invites comment on this research. EquitiesS ................................ hare of consistent ................................ participants who ha................................ d a full-TDF allocati................................ on at year-end ............... 12 wo Van rkers Der Several hei, and into 30s EBRI and 401(k) pl Bass 202 an ICI mem s by 1). defa bult, ers eve prov n i ide n th d r e abs ecords ence onof an acti 11 ve p affirmativ articipa e emplo 12 nts in 40 yee1( electi k15 ) plon. ans for This cha whi 19nge ch they ke was particularly 15 pt 33 9 A Closer Look at 401(k) Plan Target Date Fund 16% Investors’ 30s 23 16% 31 29 27 24 TDFs allocation, r large before ye . in Overa t30 ar heir -ap en at inv r24. her ll, d 2016 5 est pdf 5 th ment p an pas and w .ercent lis noul ively throu eup of i d not be co ndiv . idugh p als ha unlan desig ted in the ana d an allocat n. Ad ion lysis. ditional to equiti See a ly, ilso fes aft th the d e b er movin ulk iscussio of inv g n on pa est awment ay from a ge alloc TK. full ations -TDF all occur ocat at tion he that 16% plan lineup preferenc s and the es-mo ands-t c the om -cas mo en -fo de r-fault pers i ona nves lized tm-ent solutions option in 40 /age-evolv 1(k)in pl gans -alloc . The ation y offer -preferen a prof ces ess -and ionally -the-ma cas nag e-for ed-, 8% 35 Figure 8 Plan Sponso r Council of Am 20 erica. 16 an 20 d 0m 9. o5 v2nd Annua ed away f l rS oum rvey th of at a Profit lloca Sharin tion bg y a ye nda 4 r-01 en (k d) 2 Plans: 022 Reflecting 2008 Plan important for lower-wage and younger workers who often failed to opt in, and it removed concerns that automatic enrollment records. 40s These plan recordkeepers include 14 mutual fund c 13 ompanies, 12banks, insurance 15 compan 19 ies, and co 15nsulting >0% to <100% TDF 31 40s Left a Full-TDF Allocation (Total) 39 37 29 26 24 30 poin was wi Because th t o Sug tf new hin ges 2 em 0 te e s pe d pecific pl C rce oy itnt at ment T io of DFs h n: the , t Ho hie en r all ld by pa lden lo ocat ng , Sar er io rtic -n ah te ipan to n , ured Em eq ts are uiti ily 401(k) W es in not o illiams the p bserv articipants , year be Sted, equity allo even fore Bas are st , an mo hey move catio re lik d Crai ns while i ely g d Co to aw b pe ay (Fig e n T la fu nd DFs a rther , ure 7 “A Closer re in estimated by ) time . Young Lo from ok er at the ass 401( ir uming k) Figure 8, Older Participants Who Left a Full-TDF Allocation Were More Likely to Exit Equities Completely ................... 13 di Account B versified pe p rs or onali tfolio that zedalance -solutions rebalances to .pdf A . sse becom 9% t A e lessllo focca usedtions on growth O anv d more er T focime used on income as the fund 18 9% O Fo ld r the re er Pa sea rtirch dra cipanwn from ts Whothis data Left a F cou lll ec l-tio TD n, see F Allhttps:// ocatiowww.ici.org/ n Were MResearch ore Lik/Defin ely to ed E -Co xintribution t Equitie - s Completely might conf Experi lict wi ence th sta . C te wage wi hicago: Pthh lanol Sding laws. ponsor Cou See n ncil ot ofe America. 2 and, in pa rticular, Holden and Chism 2016. firms. Althou 50s gh the EBRI/ICI 420 01(k) project has coll 18 ecte 13 d data from 1 12996 throu14 gh 2023, the 18 universe of 15 data Fi Ho nall lden, y, Sarah 401(k), Steven plan partici Baspa s, an ntsd h Crai ave g incre Cope aslan ingd. 20 ly embra 24b. “What ced TDF Dioes nves Cons ting. ist As ent of Par yeaticipation r-end 2022, in 401( 68 pkercent ) Plans of G 401( enerate? k) 100% TDF Pe 50s rcentage of Acco 67 unt Balance 50 Invested in 32 Equities* 26 23 21 29 investors were in a fund with a target date closest to their 65th birthday. The equity portion of these assumed TDFs was partici origin Plan Targ al pan inv tsest wet ment ere Dth ate Fun cho e mo ice sd t l than Inv ikely to mak es shorter tors’ Acc -te e r ount nured elatively mo Balan 401(k) ce Ass 60sde partici s5 t changes et 0s All pan ocat 40ts s.ions O : 70 A3 s0 a spres ercent ver Ti 2ult, 0s m lon of e t ,ge ” hos EB r-te RI enur inIs the s eue Brie d irp articipants 20s f,wer no. e withi 65 are 8, and more n 20ICI approaches and passes its target date. Most 401(k) plans offer a suite of TDFs as options that are suitable for typical 6% Plans/401ks/EBRIICI401kInvestorDatabase and https://www.ebri.org/retirement/401(k)-database. 7% 10 Percenta 60s ge of participants wh 20 o held zero 20 equities* 16 in the year 16 afte 6% r they 16 left a full-T21 DF allocati18 on by age By Figure Sarah providers A1, Full H vari ol -TD den es from y F Part , ICI; icipa ear t Emily nts More o year. I Wi Like lliams n la y to Hav ddition, th , ICI; e Lo e plan St weven Tes nure usBass, ICI; and Cr ing a parti ................................ cular providaig er ................................ can cha Copela nge ov nd, EBRI er time. ............ Recor ds 15 4 plan partic Changes > ip 8a 0nts % h in el 40 d TD 1(k Fs ) P , and 38 lan Acc o pe unt rceBa nt lances of 401( ak nd ) Ass plan et Al assets loc wer ations e , 2 invest 016e–d in 2022.” TDFs ICI . Res Prior E earch BRI/ICI Persp researc ective 3h 0, also no. 60s 33 11 8Figure A1 7 6 5 7 Bodie imputed us See U , Z .Svi, . Dep R ing obe a the indu rtment of La rt C. Merton stry av bor, erage , and Emplo for that t Will yee iam Be F. arget da nef Sam its Security uelson. te, bas 1992. ed on Mornings Administrati “Labor on 2008. Supply tar’s Lifetime A Fl exibility lloc and ation Indexes (see M Portfolio Choice iorni n a Life ngstar pe likely rce Researc nt to of have the h P had ir f ers ul tpe lhe -TD ctiv oF pp e alloc , or vo tunity to r l. ation to 32, no.eq evis 6uiti (May it and af es after 202firm 6 movin ). their g ainves way com 2tm 01ent 6 pa 2 choices 0 red with 17 20.1 21 H 8enc 2 pe 0e1 rcent , 9the 2 f 0 o 2 uf partici 0 ll-TD 20F 2 al 1pan locatio 20 ts 2 i 2nn th at t eir he 60s. retirement savers, while preserving flexibility for 401(k) participants who want to make their own active allocation Plan Sponso r Council of America. 2017. 60th Annual Survey of Profit Sharing and 401(k) Plans: Reflecting 2016 Plan All 20 17 13 12 14 19 15 19 were encrypted to conceal the identity of employers and employees but were coded so that both could be tracked >60 to 80% s hows that 7, an pad rticipants t EBRI Issue end Bri to u ef, s no. e T61 DFs a 7 (A sug inten ust)de . Av d: ailab amole ng at those www.i ho ci.or lding/ g TD sysFs at tem/fi year les/20 -end 2 24-08/p 018, 8 er380 - pe 07 rce .pd nt f an had d Because of th All ese ch 68% anges in 100 the cross secti 100 ons, comparing a 100 sset all 100 ocations across differ 100 ent year 100 -end cross-secti 100 onal 2022). Cycle Model.” Journal Fullo-f TEc Do Fnomic Dyn Participa ami ntcs s an Mo dr Contro e Like l l16 No. y to H 3 a-v 4e ( JL uly ow - Oct Teober nur) e: 427–49. For youn time of ege nteri r part ng ticip he ants sam, pl se o i me of s more thi likely s result is to have by de bes en ign a d —the eliberat high av e choice. erage allocation to equities in their TDFs limits 5 Consistent sample: 2.1 million 401(k) de Figcis ure ions. A2, Recent Hires Include a Range of Worker Ages ....................................................................................... 16 Experience. Chicago: Plan Sponsor Council of America. Percentage remaining full-TDF investors See Plan Sponsor Counci 36 l of America 2024, which reports that 63.8 percent of 401(k) plans in their survey had automatic 64% 11 over mul >40 ti pl toe 6 years 0% . For each 401(k) plan participant, data include date of birth, from which an age group is sna allocated psh Coot pyright I s can ww the w.eb ir l e ead to fa ntir rn i.org for e acco ma /docs lse co ti un o /defau t b n: nclusio ala This re nce ltns. Fo -source/ to port is c r a example, spb ing ri opyright le efs/ age new h eb -ri aed ppro _ib_617_k b ires co y priate the uld show higher rates Em T -long D pF. loyee -2 7au Bene g24.pd fit Res f. of TD earch In F ownersh stitutip but move a e (EBRI). You way may their aM bio lity ve to d to increase t a 0 6% Percheir en pla t T eq n Duity pa F A rtici al llolocati c pa atnts ion on by more than 20 percent when moving away 17%. Participants in their 60s 32 through each year-end enroll Consistent pa ment in plan y rticipants in th ear 2023, c eir ompared wi 40s at year th 52 -end 2 .4 percent 016 would in ha plan y ve ranged b ear 2014. See etween 40 also, Cl an ark d 55 y 202ears 5. old during the 2016– >20 to 40% assigned; date of hire, from which a tenure ran 56% ge is assigned; outstanding loan balance; funds in the participant’s Brady, Peter, Steven Bass, and Craig Copeland. 2026. “401(k) Plan Asset Allocation, Account Balances, and Loan As from them a a copy, pr result of s t int, or thes heir tenu e dtow wo re incr nloa facto d eas rs this , f es. If the rep ull-TD ortF solely pr 401( opo krti f)or p partici on o ers f n ona pa ew hires remained nts l an with d no lon ncom ger tenu mer stable, then cial re use, were m p the rov ore li icro ded ss ke that -ly to secti 55% al onal all have e l hard oc ither co ati pion to es r actively etai n Figure A P3, erc Yo en ung tager e o or Lo f Full-T w D er F- 4 T0 enur 1(k)ed Pa P rta ic rticipants Mor ipants by Hiree YLikely ear/Y to ear Ha s ofve a Full Tenure - aT nDF d A Allocat ge, Yea ion r-E ................................ nd 2016 ... 16 The question t Hir P ee hen Y rcee an a rtrises age o , h f 4 o0w 1(do k) 401 Parti( ck) ip p anlan ts bpa y T rticip enurant e, Y se actuall ar-Endy 2engage with 016 TDF investments? More specifically, do Plan Sponsor Council of America. <20 192 83. 6 66th 1986–1996 Annual Sur 1996–2006 vey of Profit 2006–2011 Sharing and 2011–2014 401(k) Plans: 2014–2016 Reflecting 202 13% 2 Plan made the largest adjustments to their allocations to equities, with 47 percent incre 53% asing their equities allocation by 20 12% Note: Participants with a full-TDF allocation had 100 percent of their 52% 401(k) plan balance invested in target date funds. 2022 sample period. During this age range (10 to 25 years 12 before the target date of the fund) TDF equity allocation tends to >0 to 20% Despite Ho 6 lden, Sarah the well , Steven -docume Bas nte s,d an pop d Crai ularity g Co ofpe 10% Tlan DFs d. 20 and 25 t . he “What tende Does ncy of Cons 401 ist (ent k) partici Participation pants to in remai 401(n k)in Pl dans efau Ge lt nerate? Key Findings: invest Act ment ivity i po n 20 rtfolios 23.”; an 10% ICI R d a esear sset values att ch Perspectiv ribuete 32 d ,to n tho o. 2, se afunds nd EBRI . An Iss acue Brief count bal , nanc o. 655 e for( e April ach ). Ava participant ilable at is the TD Fo Fs co r example, uld also remain stable, even see Madrian and Sheathough i 2001, Cndividua hoi et al. l parti 2004 ci, and Clark 20 pants were co2nsistently ch 5, which doc an umen ging their allo t the ef 10%fect catio s of au ns. to-enrollment chosany an en the d alal locat l coion pyrig inht itiall and ot y and her /or ade pp lilb icab erately le not de ices c cided ontai to rned ther emain inein, a it. Cons nd you eque may c ntly, the ite or y may quote be small p more inclined ortions to of 34 Years of Tenure >30 >20 to 30 >10 9% to 20 >5 to 10 9% >2 to 5 0 to 2 TDF investors tend to remain invested in their TDFs, or do they take advantage of the flexibility offered and tra All de out percent or Experi T more he coence ns in ist the e.n C t s hicag year ample o: they mov is P 2lan .1 m S ilponsor lio end 4 , a 01nd (k Cou ) p 32 lanci n pe pl arcent of rtic America. ipa n de ts creas with aicng th count eir bala enqu ceit s ies allo at the en cation d of eac by h y2 e0 ar pe frorce m 2nt 01 6 or more. decrease the most (see Investment Company Institute 2025a). 13 Zero Figure A4, Participants Who Left a Full-TDF Allocat 37 ion ............................................................................................ 17 investments Changes at leas int 40 ov1( erk th ) P e lan first Acc feo w unt yea Ba rslances in the a 40 nd 1 Ass (k),et Al it is st locations ill unclear h , 2019o –w 20long 23.” ICI individu Research al participants st Perspectiveay 31, no. sum of the participant’s assets in all funds. Plan balances are constructed as the sum of all participant balances in on particiww pation w.ici.org rates in 4 /sys01( tem/fil k) plans a es/2026 nd re -04/p sulting investm er32-02.pdfent a and llw oc watio w.eb ns. ri.org /docs/default-source/pbriefs/ebri_ib_655_k- continue the re tto hport rohold ughpro 2 th 02 vided that at 2; 0 int .7 enti millio onal you n of t d allo heo so se cation co verb nsis over tim te at nti m and w 4 H 0i1 re (k e. ) Yp e la aith pr n r p / a Y rte ic oper aip rs an o ts c f itation. h Ta e dn a u fru e llAny use -TDF allocbe atio yo n nd at y t ehe ar-esnco d 2 pe 01 6 of . the foregoing Full EBRI/ICI 401(k) Da 20% tabase Consistent Participants Full-TDF Participants 20 of their TD20s Fs to customize their asset allocation? 3 5 6 5 20% Holden, Bass, and Copeland 2024b presents the analysis of the full consistent sample of 401(k) plan participants who had Drawing from the HiEBR re Ye I/ICI ar 401(k) database, this paper follows a group of consistent 401(k) plan participants over a 1986 or Earlier 1986–1996 1996-2006 2006-2011 2011-2014 2014-2016 33 invested i 6n , an TDd Fs over EBRI Is ts he co ue Bri urs efe , no. of their 641 c (A areers ugust. S ). evera Availab l factor le at w s ww.i may ci.or influe g/nce sys w tem/fi 23% hether les/a 20 4201(k) 5-08/2 p5 articipant -per31-06 rem .pdf ains in and In a the dditi pl xsec an. on to - 9a partici pr26.p pan df. <1 t -dire 986cted chan 1986–1996 ges to asset allo 1996–2006 cation, the p 2006–2011 22% ercentage of the a 2011–2014 ccoun 2014–2016 t balance in equities is also Plan Sponsor Council of America. 2024. 67th Annual Survey of Profit Sharing and 401(k) Plans: Reflecting 2023 Plan requir So es EBRI urc 0 e to : T 2 a’s b p ula rior tionsex fro pres m EB s p Rermis I/ICI Pasrt 22 ion. icipaFor nt-Dipe recrmis ted R se io tins, rem p en lease t Plan con D 18 ata tact Col EBRI at lection Pro p jeermis ct sions@ 34 ebri.org. 7 30s 3 4 5 6 7.0% 5 Figure A5, Default Investment Option Used for Automatic Deferrals ........................................................................ 17 acco The off untsering o from yea f Tr DFs in 40 -end 2016 1(k) through y plans ha ear s exp -end 2 anded in p 022. Hoart b lden, B ecau ass se increas , and Copel ing n anumbe d 2025 rs of presen 401(k) pl ts an an ans ar alysis of an e using a otutomati her c six-year period. A few key insights emerge from looking at the 0.7 million consistent 401(k) plan participants who were 12.6% Years of Tenure 12% >30 >20 to 30 >10 to 20 >5 to 10 >2 to 5 0 to 2 the While th same A ese ti ww g T eD w.eb Fming : ri.org -relate /docs d f >3 /defau acto 0 rs may co lt-s >2 ource/ 0 to ntribu 3 pb 0 riefs/ te >1 to eb 0higher ri to _ib_641_k 20 TDF >5 ret - long to en 1tion amon 0 -28aug25 >2 .pd tg olo 5 fng . er-ten 0 ured to 2 participan Alts l , there is affected by changes in the relative prices of the different holdings in a participant’s 401(k) portfolio. Annual snapshots from the EBRI/ICI 401(k) database reveal that a majority of 401(k) plan participants hold TDFs, Experi >2ence to 5. Chicago: Plan Sponsor 21 Council of America. 20 25 40s 5 5 4 5 7 5 21.2% 7.8% co enroll nsistent s ment (se ample of 401(k) pl e note 5), and Tan DFs a partici re often pants the ch —those osen de who ha fad accounts f ult in plans w rom ith au yea to r-matic enrol end 2019 th lment. rough y Plan ea S r-end ponso 2023. r Co uncil of Hire Year 24.4% fully invested in target date funds (TDFs) as of year-end 2016: 62% 1986 or Earlier 1986-1996 1996-2006 2006-2011 2011-2014 2014-2016 Investment Options Brien, Michael J., Philip J. Cross, Thomas A. Dunn, Joice A. Pharris, and Constantijn W.A. Panis. 2010. “Target Date also a Repo comrt peti Av ng ai la effect bilit within the y: This rep lort onge is availa st tenure ble g on roup the . Participa internet at nts w wi ww.e th the bri.org longe st tenure are also more likely to be 20s 9 18 25 15 whe ther by Mov ace tive choic d to a 0 Pe e orrce acceptin nt TDF Allocation g them as a defaultF . iInves gure tor 7 s in TDFs appear to value the hands-off diversification >5 to 10 20 22 23 34 50s 7 7 5 5 6 7 6 Mid America report This di -Tenure versity i s 31 n n d percent ew all 401(k oc of ation ) plans P to artici equ in their s ity i pants s co ample wi nsistent with o Are th a M utomati ost lder 401(k) pla L c enrol ikely lmt ent u o n pa Rema sed TDFs rticipants in Full as th seek e def ing to y Ianvested ult investmen personalize the in T t in 2 ir as DF 006, set s 51% 21 Hold • en, 25 Sarah Chan, Pe ges ma ter Bde rady, byand pla M n sponso ichael Hadl rs: ey. Em2006. ployers “401(k) may s P witch lans: recor A 25dk -ye eepers ar Ret , updat rospectiv e the e.” ir IiCI Re nvestm searc ent h lineups, or 15.6% Funds and Retirement Savings.” A study by Deloitte Financial Advisory Services in conjunction with Advanced Qures At yea hi, r- Ham end mad, James 2016, the demograph Duvall, an ic chara d Shect lly eristi Antoni cs oewi f thce 2.1 mil z. 2024.lion consi “The Fact stent 40 (or)s Matt 1(k) pa er W rtic he ipants were simil n Measuring TDF ar to the older Years and o 30s f T a en pp urre oaching retirement—a time when indi 27 viduals often 32 reassess the29 ir portfolios to bett 28 er align28 with their >30 >20 to 30 >10 to 20 >5 to 10 >2 to 5 0 to 2 and rebalanci >1 ng 0 t that occur o 20 Yo withi ungn e the r Pa TD rtiF. 24 cip At t an he ts sW ame ho time, Lefts a om Feu hav ll-28 Te DqF uest Allione oca d tiw oheth n Wer erse uc 15h glide paths constrain 60s 10 10 9 9 10 13 11 38 • Most consistent 401(k) participants who were fully invested in TDFs remained fully invested. allo rising to 60 cations as th percent ey a in 2008 and 86 re approaching retirement. Th percent in 2023 ( is result i see Figure s consistent wit A5). See Plan h Ch Soukh ponso mr C anouncil e and of Ameri de Silva 2 ca 200 024; an 3, 2007, 2008, d Banerjee et Among In the cons EBRI istent /ICI 4 401(k) 01( pla k) data n part base, in icipants vest who were ment options ar full-TDF e gro invest upe ors d into at year eigh -t en broad d 201 c 6ategories. , those with mid-level job For all of Pers select new pe the ctiv figures e de 12 fault , n in o.2. Ava 26inv this r estep me ilable at ort nts , com 5 . 3 W . 9 w hpon % en ww.i t ents his ci. 36% h org/sys may not appens, tem/f p add to th art iles/att icipants e achme tot can b als prese nte s/p autom ernted 12-atic 02 be .pdf all caus y mapped . e of round to a ing d.iff erent 36% broader EB Analytica RI/ICI 401(k) databas l Consulting Ge. ro up However Inc, for , t the he s U ubse S D t o epartme f 401(k) partic nt of Labor, ipants who w Employee B ere full ene -TD fits F iSecurity A nvestors at yea dministr r-end ation 2016 anticipat 40s ed Performan income ce.” need ICI s. Vi Tehis li wpoi fe nt -s stag (Oct 34 e-ob driven er 14 ad ). Available at jus 33tment may ww 27 red w.ici.org uce TD/vi F 25 ret ewp en otion rates ints/24-23 view amo -tdf ng - t perfor he long 26mance est-. investors—par >2 ticularly t 0 to 30 hose nearing retire9ment—who would otherwise10 prefer to personalize the3 ir asset allocation. All 60.8% More L 8ikely to M 7aintain Si5 milar 30% Alloc4 ation to31% E6 quities 7 8% 6 2009, al. 2025 2017, . Am ong partici 2023, and 2024; pants an who we d additi re 100 onal discussio percentn in invest Hoe lden d in , Salinas, Seligman, an TDFs at year-end 2016, d Bass 85 2024. percent remained fully tenure are the most likely to remain fully invested in TDFs through year-end 2022. For example, among full-TDF TDF, or even to a non-TDF option, without making an active choice. was youn(ger a Marcnd ten h). Avail ded to h able at av e shorter job tenure relative to the full consistent sample and to the full EBRI/ICI 401(k) 50s 64 52 32 26 22 19 25 tenured group. Note: Participants with a full-TDF allocation had 100 percen 7% t of their 401(k) plan balance invested in target date funds. The sample is consistent >30 5 3 1 44.0% Percentage of participants who left a full-TDF allocation by age • Equity funds consist of pooled investments primarily invested in stocks, including equity mutual funds, bank invested in TDFs through year-end 2022. HoldBecause en, Sarah the , and Elen annual cros a Barone Ch s-sections ism cover . 2016. in “ diTen Yea viduals w rsith a After t wihe PP de ran A, the Pat ge of particip h to atio Retireme n expe nt Sa riencving es in Is 4 Eas 01(k) ier. p” lan ICI s, invest 8 35 ors in their 50s at year-end 2016, 88 percent of those with five to 10 years of tenure remai 80.1 ne %d fully invested in Sabelhaus Mov, Jo ed hn, to aMich 1–99 ael Pe B rc ogd entan, TD and F AllD oaniel Schras cation s. 2008. Equity and Bond Ownership in America, 2008. data Betw Fobase r the compl een (see 2006 Fi an ete u gure d 2022 pdate f A1). T , larg his resu rom the y e 401 lts from yo (k) ear plans -end 2022 that were in unger EBR and re I/ICI 401(k) M cently hired arketPro Reti 34.1 data % 40 ba remen 1(k) se, see Ho partici t powpan ered by lden, ts being more li Bass, and Copeland 20 BrightScope kely to be fu in every y 24 e lla ar y . added 40 Thi 1(ks ) p paper fo art60s icww ipan w.d tll sows inol. thgov/ a grou eir 60ssites/dolg wp h36 o o f wcons ere ov fu/f ist llyi lent ies/ebsa nve 14 401( sted i/pdf n k ) ta pl rg _f an eitles/targ d par a9 te fticipants ov und et s -adat t yee a- r-e 6 fer und nda six 2 s0 -and 16-,y d ear -ra retirement w 5pe n fro riod m thto - es 2 avi ex .1 pl ng 4 more ills io .pdf n the 40.1 (k pe ) p rs l6 aist n p enc artie cipor ants All 100 100 100 14 collective trusts, life insurance separate accounts, and other pooled investments. 48.6% meanin • Jo View b ch gfpoin ul an an ts alys ges o (Aug is of r r ustth eti 22). Av e re evo me lution ailab nt: The U le of at T D w .F Sw .i w.ici.org nves worktm forc ents /vie e is w for i poin hig nhly di tsvi /vie mobi dual w_ le. 40 16_ 1(k W ppa )hen p.a rticip work ants ers must e change xa jomine bs or retire, their wTDF ith acsc throu ount bH a gh lia rn e year c Y es e a a-r ten the d e2022 nd of e(aFi ch g< ure 3 y1 e9 a8 r 6 fro ). Th m 1986–1996 20 is com 16 thropares ugh 21996–2006 02 w 2ith . Ag8 e2 a n pe d trc e 2006–2011 n ent ure of grot uhos ps ae with 2011–2014 re basetwo years d on pa 2014–2016 rticip or ant les age s of and te tenure nure a and t yea r- Washington, DC: Investment Company Institute; New York: Securities Industry and Financial Markets invested an average of in TDFs ( seven inv see Figure A3). estment opti 5% ons, on net, to their plan lineups, going from 22 investment options on average in 2006 flexibility of All their TDF use.100 By focusing 100 on observed i100 nvestment be 100 havior over a 100 n ext 40end .6%ed per 100 iod, this anal 100 ysis provides 36 99.1% 100.0% 100.0% • Wh 5% en moving away from TDFs, participants in their 60s were the most likely to completely exit The EBRI/ICI 401(k) database environment is certified to be fully compliant with the ISO-27002 Information Security Audit 15 20s 30s 40s 50s 60s All en d 2016. The tenure variable is generally years working at current employer and thus may overstate years of participation in the 401(k) plan. 401(k they oft ) plan ac en counts roll over th over m eir 40 ultip 1( le k)years balanc . Drawi es into i ng from ndividu the al 2. retireme 1 million nt acc consis ounts tent (I401( RAs) k) o p r a lan n p ew arti em cipan ployer ts in th ’s plan. e 80 Brig pe htrc Scope ent Pe Y o re a c f t ae nd rn hos st I o C nves fe h Twit a en n tm g h ue rent mo ein re tha Company Alloca > n t3 io 3 0n 0 In y tea os tE > rs itute. q 2 of 0 u it t te o ie 20 s 3 nure * 0 25. .> T 1 he 0 tBr o ig 20 htScop >5e/ICI to 10 Defin> e2 d Cont to 5 ributio 0 n toP 2 lan ProfilA e: ll A Close Association (December). Available at www.ici.org/system/files/attachments/rpt_08_equity_owners.pdf. to Whe 29 in 20 n M 22. TD oving Away Fs accounted for much From Full of the n -TDF et increase Inve in the n stment um, ber Older of investmen 401(k) t optParti ions offci ered. pants If a TDF s Are uite is Most new insight into how TDFs are used in practice. At year-end 2016, 36 percent of 401(k) plan participants in the 22 • Similarly, Percebon ntagd e fo und f 40s1 are (k) any Parti p cip oole ants d b ac y count Age, Yprimarily ear-End inv 201est 6 ed in bonds. TDFs. In contrast, when moving away from TDFs, younger participants were more likely to reduce their TDF Ho stan Th lddard. More en, is an Sarah alysis co , Sh over, nsiders th an EBR non Sali I ha e individual 401(k) partic s obtai nas, Jason Se ned a legal opi ligman, nioipant’ and n th St at the s al even lo methodo cati Bas on to s. 2 the logy 024TD use . “Qual F d meets category a ified Def the priva nd d ault oes not Inv cy sta est disti ment Alter ndards of the nguish a nati ny Gramm ves - Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project EBRI/ICI Thes 401( e rollov k) d eratabas s frequently e with account result in change balances from s to the ye partic ar-en ipan d 20 t’s 16 invest through year ment allocatio -end ns 2022, t , inclu his dinpap g pot er f ential ocuses on 20s 8 10 12 11 Look at 401(k) Plans, 2022. San Diego, CA: Brigh Fig tSco urep 3 e, and Washington, DC: Investment Company Institute. counted as a single investment option, then the number of investment options offered in consistent plans only increased, on Likely to Completely Exit TDFs cons istent sample had 20% or 100 mor e percent of their accounts invested in TDFs (full-TDF investors). Most (85 percent) of these Note: The upper-panel sample is 2.1 million consistent 401(k) plan participants with account balances from year-end 2016 to va Lea riati ch-on in the Blilhold ey Ac int. specific gs rath At no ti eun r than me ha derlying e s an xit co y TDF nonpu mpletely (s) hel blic d in the personal informatio . account. n that is personally identifiable, such as a Social Security (QDIAs) - Start to Finish, D 16 efault to Payout.” Written Statement of the Investment Company Institute to the Hire Year Samuelso the N 0. chang on, t7 e:mi W Thill lli es in eiam, on sam consis TDF pa lend Ric is al 2 tent .1 locatio 1 9 hard m 86 i401( l lio orn ns Ea Zeckh ck) o .rn l p is e irlan saus 2 te 5 n p 1 .t4 9 er. 198 arti % 8 46 0- 1cipan 1 (k 9) 9p 8. 6lats n “ Stat p who h a1 rt 9ic us Quo B 9i6 p- aad 2 n0 ts 0 a 6 w i1 th ias in 00 ac 2 c pe 0o 0 D u 6 rc n -ecisio tent 2 b 0a 1l1 aal nn clocatio e -Mak s 2 a0 t 1 tih 1 ng n e - 2 to TD e .” 0 n 1 d Journa 4 of Fs at y eac2h l 0 1 o ye 4 f ea a -Risk r 2r f0 ro - 1 1 en 6 m 5 a . d 2016 a 7 nd 2% 016 nd Av 30s ailable at www.ici.org/system/files/2025-03/25-r8 pt-dcplan-pro 8file22-401k. 10 pdf.Butrica, 13 Barbara, Keenan 10 average M y , fro i ed ar-e -T m n e d 19 opti n 2u 02 r2 e.d T ons in 2006 to 20 opti hP e a lor wte ic r-p ip an aen l s ts am A plr ee io s ns in 2 M 0.o 7 s mt il l022. Se iL on ik ce on ly se Exhibi i stto en tR 4e 0t 2.3 i 1 m (ka ) p in an BrightScope an rt F icu ipa lln y ts I w nh v oe w setre ed In d fu li ly n ves i nT vtme ea sr te g nt de in t Co tD ampan rg ae tte d a y In F te u n stit ds ute • Balanced funds are pooled accounts invested in both stocks and bonds. They are classified into two Of fullthe -TD F inves consisttent ors continued 401(k) plan to be part f icip ulla -TD ntsF inves who were tors thro full-TDF ugh year invest -en ors d 2022 at year , th -en e end d 201 of 6, t he thes oldes tudy pe t partici riod, an pan d ts 15 w ere Full EBRI/ICI 401(k) Database Consistent Participants Full-TDF Participants number, been tran Les sfe s trred to o han 20%r shared with EBRI. 25.3% th 20 rou 2g 4 h ERI 2022 SA A 2.2 A .3 g% edviso group ry Counci s are baseld ( o Oct n po art be icr ip )a . A nt vailabl age at ye e at ar-eww nd 2 w.ici.org 016. /system/files/2025-05/25-testimony-erisa- 23 Uncertainty 1 (March): 7-59. trac fu ks nd the Ye s a atr ir s ye as o af r-e s Tet all e nd n u 2r0e ocat 16, dion raw t n o T from D Fs an the 2.1d m ot illiher on 4as 01(k sets ) pl f an ro pm 2016 articipant to 20 s with a 22 cc.o unt balances at the end of each year See note 7. 40s >30 >20 t10 o 30 >10 9 to 20 >5 8 to 10 9>2 to 5 13 0 to 2 10 2025. For a s Dworak imilar an -Fisher alysis of large ERISA 4 , and Pamela Perun03(b) . 201 plans, see 5. “Pension Inv Plan estmen Struct t Cures B ompany efo Ins re and A 27 tit 1u 2te an .2%fter t d ISS M he Par ension ket In P tell rotec igence 2025 tion Act . Share of co sub nsi categor stent 4 ies: 01 ( TD k)F p s and articinon pan –ttarget s who d at ha e b d a alance full-T d D fun F ds. allo cation at every year end among those who had a percent made reallocations. This study additionally documents whether the 401(k) participants who moved away from the mo • st li Wh kely en 20s to move moving awa awy from ay from TD a full-Fs, o 14 TDF allocation lder 401( (k) p Figure arti 4cipants , uppe 10 r p typi anelc ).ally This matrend de la irger s driven 15 adjust by partici mentpan s tot s in 8.5% • fSo ro Pa qd m urc ia. rt 2e 0icipant pdf :1 T 6 a t.h b ro ula utg i- o h driven rea n 2 s0 f2 ro 2m . A EB ge R an Ill /d IC o tIcati e Pa nurt re o ic g n: ip ro a u n 4p t01(k -D s a ire re c) tb e partici a ds R ed e to ire n pan m pa ert ts nitc, Pl ip whe a an nt D a th g ae ter th a a C no dl ey lte ec ntu iwere o re n Pro at originally yje ea cr-e t nd 20 1 de 6.faul Thet ted en i ure nto TDFs or 37 Account balan 50s ces are net of unpaid lo 13 an balances. Thu 11 s, unpa 8 id loan bala7 nces are not in 8 cluded in an 11y of the eight as 9 set of 2006.” Final Report Submitted to the US Department of Labor, Employee Benefits Security Administration, 40 24 1(k) Participants Who Move Away From a Full-TDF Position Tend to Adjust Their Moved to a 1–99 Pe full-TDF allo rce cant TDF Allocation tion at year-end 2016 by age and hire year/years of tenure full their -TD 60 Fs thei invest com 30s r equity pl men etely e t cha xitin al nged log TDF cati their ons s w equity than youn hen m 24 e ov xp ing osger ure. away p ar frti om cipants the full allo . For exam 24 cation p le, (Fi gu amo re ng 4 4, middle 01(k) p partici 28 anel)pan . ts in their 60s See Holden, Bass, and Copeland 2024 1.7%a for the rising offering and use of TDFs in the EBRI/ICI 401(k) database. See also, Furthermore, b variable etween 200 is generally ye 6 a ars nd 2 work 022, l ing atarge c1 u1 rre .1 401(k) pl n% t emplo3 ye an 0r .2 a s th % nd tat were in hus may ovMa erstra ketP te ye ro R ars etirement pow of part 7i.c 2ip % ation inered by the 401 Bri (k) p ghtS lan. cope in every U.S. Departm actively ent chos of Labor e TDF , Em s, m play oyee Ben later decid efitse Sto ecurity adjust Administra their asset all tion. ocat 2006 ion. . “D The efasuelt In dec ves isions tment —refle Alternativ cting chang es Und ing er 1.2% 4.9% 8.2% 3% 47% 13% categories des 60scribed. 9 9 7 6 6 8 7 ? A TDF typically rebalances its portfolio to beco 20% me less focused on growth and more focused on income as by the Urban Institute (September). Available at 27% Equities Allocations 19.9% Table o 40s f Contents 25 30 26 Bri HoghtS lden, co Sarah who pe an mov , and Da d Ined ves a tment C way f niel Srom chras ompany TDF s. 2 s Ins 0 , 4 25 7 tit . pe u “T te 2025 rc he ent Ro ile for the ncreas of IRAs ed risi the ing off n 4.US 1 ir% e Hou ering quity al sehold anlocati d us s’ Sav e of on b TD in yg 2 Fs by for 0 p R erc large 401 etent ireme ornt, 2024. more (k) plans in and ” IC 32I year adde Sod urc an e: av Taerage bulatio of sev ns fromen T EBR DFs, o I/ICI Pa n n rtice ip t, a to nt-D their plan lineups irected Retirement, go Plan ing from 2.9 TDFs, o Data Collection Projecn a t verage, in 2006 1to 7. 10.0 in 1% 20s 30s 40s 50s 60s All Participant-Directed Individual Account Plans.” Fact Sheet (September). Available at financial goals or a desire for more control over or personalization of their asset allocations—can result in a 2.6% 2.4% 11.9% All 12 10 8 8 9 12 10 it approaches and passes the target date of the fund, which is usually included in the fund’s name. Most of the ww 40 w.d 1( ol. k)gov/ partici sites/dolg pants who wer ov/files/EBSA e fully in /resea vest Pe rchers nsi ed on in /ana TPro DFs at lys tec is/retireme tion yearA -ct end 20 of nt/ 20 p 1ension 06 6 r e (PP main -A struct )ed fu ull res y i-nves before ted in -after TD -2Fs 006 for - 38 This pattern is consistent across tenure groups, suggesting that regardless of how long an individual has been with Increased 7.2% 0.9% TDF Introductio Ma Th rketP sis system of follo ro R pe w n rce etirement pow a ................................ 50s nt struct cl de ass 5cre .ured 1ific % as atio g ed ered by lide p th n deir eq oes not at Bri h ................................ u ghtS th ity allocation co at gr co 5 nsid 25 .3 pe adu % er the (draw ally by re nu ing da du 2 mber 0ce p ta f ................................ sercent e of disti rom quity the D o nct inve e r more xpos e29 partmen ure stment opti . as t t o ................................ he fun f Lons abor’s Fo d presen approac rm 5500 ted to 25 hes a and .......................... fili given ngs). pass partici Fo es its r apa simi nt, lar 4 2022. See Exhi Researc bit 2. h P 7 in Bri erspectiv ghtS e co 31, pe an no. d In 2 (Marc vestmen h). A t Co vailabl mpan e at y Insti htttute 202 ps://ww5. w.ici.o rg/system/files/2025-03/per31-02.pdf. Age Group ww move away w.dol.gov/ from agen T34% D ciF es/e inves bsa tments /about.- ebsa/our-activities/resource-center/fact-sheets/default-investment- 32% This study focuses on the asset allocation choices of the 0.7 million consistent 401(k) participants who were full-TDF Allocation *Eq uities include equity funds, company stock, and the equity portion of balanced funds. For additional detail, see the box on page 14. many their em years pl act. oy . pd e N reverthel , ag f. e itsess elf is a , a s consis ubset tent madpr e s ed ub ictor stantial of TD allo F ication cha nvestment nge exits s—. F particularly or exampl as p e, amo articip ng fu ant ll- sT ap DF 26% proac inves htor ed s at but ra analysis of larg ther, the 60s e ERISA 4 types of o03(b) ptions p plans, see In resented. Plan S 11 vestmen ponso t Co r Co mpan un 22% y Insti cil of Ame tute a ricnd I a 20 7 S23 indicate S Market Intelli s thagence 2 t in 2022, 6025. the a verage number target 60s date, aligning with investors’ expected transitions into retirement. When 401(k) participants move away from a N B oe te fo : Pa re rticipaA ntfste w rith a fuB ll-T efD oF re allocatiA on ft e ha rd 100 B pe erc foe rn et of theA ir f4 te 01 r(k) plaB n e bfao la rn ece inveA sfte te dr in targe Bte dfa otree funds. A Th fte e r 39 21 17% alternatives-under-participant-directed-individual-account-plans. Background: Rising Use of TDFs ............................................................................................................................. 4 ? Non-target date balanced funds include asset allocation or hybrid funds, in addition to lifestyle funds. Fo invest r a sors imi at lar an year alysis of large -end 2016. ERISA 40 These i3(b) ndivid plans, see In uals remain ve ed stment Company in the database Ins eac tith ute an year th d IS rough S Market I year- ntelli end gence 2 2022, al 025. lowiSe nge 9% retirement—perhaps reflecting a more individualized or personalized asset allocation approach. Taken together, the NoHo year te: T ld h-en, e en sa d 20 Sarah mple16, is, Jack Va 0 11 .1 m piercent llionnDer con s ohei, if stthos ena t nd Steve 4e 0 1in (k the ) part ir n ic 60 iBas pas n ts s at . 202 w year ho h 1. “Tar a -d e nd a fu 2016 lge l-Tt DF Date mo allov c Fu a etd io nn to a ds: Evide at y e 0a r-e perce nn dce Poi 2nt 01 6 T DF ants nd al to mlocati ovG ed rowin aon way by g fro Po year mpu thla a -en t rity ald lo an catio dn 50s of inves stment fund opti ample A isl l0.7 millioons av n consiailabl stent e f 401 or parti (k) pa 100 rtici cipan pantt co s wh ntributio o were fu ns was lly inves 21 a ted i100 nmong the 68 target date fun 7 dplans s s at yeaurv r-en e100 dyed 201 . B 6, rightScope an drawn from d full -TDF allocation, they step outside this preset path—leading to more varied equity allocations that likely reflect This paper focuses on the third factor by examining the evolving role of TDFs among the 0.7 million consistent 401(k) 25 20s 30s Fig 4u 0r se A3 50s 60s In the sample of full-TDF 401(k) participants analyzed, 100 percent of full-TDF 401(k) participants with more than 30 years also, for a long Carro Holden, B ll, Gabr itud ie inal ass l D., Jam , and Copel assess es J. menan t of Choi, D d 2024 inves avi atm .d en Lat b ibse on, Br havior igitt while e C. Madri removiang n, th ane d eAn ffects drew of Met 401(k rick. ) 2 partici 009. “ pan Optimal De ts and pla faul 55% ns ts and prior to year-end 2022. Participant allocation to equities is reported for the first year-end after the p40% articipant exited a21% full-TDF allocation.28 Age groups 50% Cons 40s ist th ent e 2.1 4 0 m1( illik o) n P 40 lan Par 1(k) plati n cipan particits pa70% ’ Use of nts with T acD co Fs un ................................ t 66% balances at the end of ea ................................ ch year from 2016 through ................................ 2022. Age and tenure ...... 5 res 20 2ults off 2, wher er a eas mo onl re n y about 5 uanced pe view of rcent oT f DF all ot usher e, one age t g hat roup high s move lightsd both to a t0 he dura percent bi lity o allocat f Tion durin DFs and th g thi e s pr pe esence riod. of The se Appropriate Use by 401(k) Plan Participants.” ICI Research Perspective 27, no. -12% 7, and EBRI Iss 17 ue Brief, no. 537 Investment Company Institute 2025 reports an average of 29 investment options in 2022, and an average of 20 investment U pl di.vers an S. p De e ind artic partm ip ivid ants ent ual pref w ofho Labor, h erenc ad aEm e fsul , f pl l-inanc oy TDF all ee Ben ial go ocefi ation als, ts S an (ecurity wh d ri ethe sk t Administra r b olerances y active .tion c Ol hd oice or . 2 er 401 007. d “ (k) e Dfaul p efa lan tu)lt In p atartic year ves ip tm -ants en ent d 2016 dis Alternativ play a . Trackin w es U idernd g array er th e • Company stock is equity in the 401(k) plan’s sponsor (the employer). areof tenu based o re were n particip 50 or o ant agelder at yea at year-endr 2 -end 016.2016 (see Figure A2, lower panel). Additionally, 100 percent of full-TDF 401(k) grouY ps o a u re n b g ae sr e do or n pL art o ic w ipe an rt- T age en au ndr e ted nu re P a ar t t yi ec ai r-e pa nd n 2 ts 01 6 M . T o hr ee t eL nu ik ree v -la 23% y ri a tb o le H isa gv en e e ra al ly F y u elalrs -T w D oF rk in A gl l ao t c cua rre tio ntn enterin 30s g Act or exi ive Dec ting t isio he ns. data ” T bhe aseQ . uar By terly Journ focusing on al this of Ec gro onom up, th icsis p 124 a pe (4r) : can 1639 she –16 d l7 ig 4ht . on TDF investments over time, *Equities include equity funds, company stock, and the equity portion of balanced funds. For additional detail, see the box on page 9 meaningful variation in participant behavior over time. findings su (Se gge ptemb Nos te t that the : Ter) he .u p Av pe dec ailab r-pan ision to le el at sam w pww.i lcom e is 2ci.or plet .1 mely g/ illiosnys e c xit TD o tem/fi nsistF eles/ n -s29% t i 4 s0 l 20 1ikely (k 2) 1p-l ag 09/p an p ea-er2 rt driven. icip 7a -07 nts P . w pd ut ith f d a an icfc feren d ou ww nt t bw. ly, w alaeb ncri.or hil es e fro mid g/docs m- 29% y- eten ar- /de ured fault 40 - 1(k) opt See Ho ions whe lden, B n a ass TDF , and Copel suite is coan und 2024 ted as a. a sing le investment option. Decreased Ongoing of allocatParticipa 401( ions t k) o equities Part nt Dir icip ected ants bot T Individ h e bnd to R efore u a al n em Acc d after mov ain -34% ount Inv P est lans. ied ng a in T ” Fway f ed DFs eral R rom ................................ eg TDF ister s, w 72hich , No sug . 20g 5 (Octo est ................................ s that berol 2de 4)r : p 6045 artic2-6048 ipants ................. 0. 6 asset allocations of these full-TDF investors provides some insight into the persistence of TDF investments among -36% employer and thus may overstate years of participation in the 401(k) plan. Sopartici u2 rc 0es : Tpan abuS lts who had more tha ath ioa nr se fro o m f EB coR nIsi /IC st I Pa en n 2 rtti c4 0 y ip0 a1 n ears t( -D k) ire of tenu p ca ter dt iR ci e re were 40 p tire am ntes ntw Plh ao or o n D ha a lder at yea ta d C a o llfeu cltli- oT n r -D Pro end Fj ea c 2016. On ltlocation the other h at year-e an nd d, l 2 ess th 016 an by half (46 14. and the broader implications for retirement investment strategies. As plan sponsors, financial services firms, end 2016 to year-end 2022. The lower-panel sample is 0.7 million 401(k) plan participants with account balances participants ex Allo hib caite tio d higher n retention rates possibly as a result of an active investment choice by year-end 2016, older source/pbriefs/ebri_ib_537_401ktdfs-9sep21.pdf. • Money funds consist of those funds designed to maintain a stable share price. 10 ongoin app 39 reciate g 401(k Av the ailab f ) le le pl at xibility o an p warti ww.g cip f bov ants eing able to info. ov go er tim v/content pers e (sonalize or c pecifi /pkgc/F ally, R-2fust 007 rom om - year 10 ize -24/ -th end p eir df/0 ass 2071-et all 6 5147 thro ocat .pd ugh fi. ons year . -end 2022). Hire Year Choi, James Source :J. T, David abulation Laibso s from EBR n, Bri I/IC gi I tte Part C. icipMadrian, ant-Direct ean d R de Andre tiremen w t Pl Metr an Dic ak ta. C 2004. ollectio"n For ProBetter or ject for Worse: Default Effects percent) o Lifes See Ho tyle funds lden, B f full-TD ass maintain a F 401(k) parti , and Copel 1 pre 98an 6determined risk leve ci o d 2024 pan r Eats wi rliea. r th 1two 986- or fewer y 199 l and ge 6 1ears 9n 9erally use 6-2 of tenu 006 wo re 2were 40 or o 0rds su 06-20ch as 11 “co ld 2er at y 0ns 11-- erva 32% 20ear 1tive, 4 -end ” “mode 20 2016. 14-2rate,” o 0 16 r Mid-Tenureda 401( t the e kn )d Partici of each pa ye nts ar Are from 2 Mos 016 t L thro ikely to ug h hi r2e 0 2ye Remai 2, a a nrd/ ye w n ha F o ull r hs ay I do afnves ft ue ll-T nted in u Dr Fe alloc TD atio Fs n ................................ at year-end 2016. Age gro..................... ups 7 poli cymakers, and individual retirement savers consider the role of TDFs in 401(k) plan participants’ retirement Note: The sample is 0.1 million consistent 401(k) participants who had a full-TDF allocation at year-end 2016 and moved away from participants’ likelihood of exiting TDFs appears unrelated to when they initially entered the plan. Instead, it is likely that are based on participant age at year-end 2016. “aggressive” in their na and 401(k) Same to i vings B ndicate the ehavior." P fun ubd’s lish risk level. ed as Ch Lifes aptertyle fu 2, Pers ndpe s g ctiv ene es o rally are inc n the Econom luded in the ics of no Aging n–target da . David te A. Wise, Years of Tenure >30 >240 0 to 30 >10 to 20 >5 to 1 41 0 >2 to 5 0 to 2 26 11 invest thment st at allocatrio ategie n prior st, o it i yea sr-e importa nd 2022nt to . "Bef underst ore" indica an ted wh s the a ether llocatio 401(k n to eq ) up itilan partici es at the finpan al yeta sr-e are persis nd at whicten h tht T e pD art F iciinves pant h tor ads a or Inves Background: tment Company I Risi nst ng itutUse e. 202of 5a . TD “Qui Fs ck Facts on Target Date Fun-ds 33% .” Available at www.ici.org/system/files/2025- • Stable value products, such as GICs and other stable value funds, are reported as one category. W he Fo See Ho n r example, Mov lden, Van ing Away see S Derh F abelhaus, rom ei, an Fu dll Bass 2021 -Bo TDF gdan In, and Sc ves . tment, Ol hrass 20 der08. B 401( odi k) e, Merton, Participants and S Are am Mos uelson t Likely to Com 1992 explain th pletely Ex at younger it U the .S.de De sire partm for ent greater of Labor, portfol Em io f plloy exiee Ben bility an efi d tscus Security tomizatio Administra n or pers tion onal . 2 ization 008. “as Reg retir ulation R ement a elatin ppro g to aches Quali may fied D be t efaul he t Determining a 401(k) Participant’s F All iguoc re ati A5on to Equities -30% Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project -31% balanfced fund ull-TEd. DF a H Cambr llo ica rce a tegory. tY ioe n idg a . r "A e, MA: f ter" indiNation cates thal e a Bur lloceau ation of to E eqconom uities atic thR e ese firstarch. year-e nd at which the participant moved away from a full- Years of <1986 1986–1996 1996–2006 2006–2011 2011–2014 2014–2016 choose to step off the TDF glide path and personalize their asset allocations at some point in time. TDFs ................................ 12/25-ici-quick-facts ................................ -target-date-funds.pdf ................................ . .................................................................... 8 TDF individuals can s follow a gl coide nsider the path desi ir futu gnere wo d to mana rk/labo -31% ge r inco a divers me as ifie a bond d asset al -like inv locat estmen ion, gt an radu d ther ally sefore ha hifting a ve a way fr higher om a f allo oc catio us o n to n primary driver Investm ofent the Al tenden ternativ cyes i to move n Participant away from a -Directed fullI-nd TDF ividu allocat al Acc ion ount . Plans.” Fact Sheet (April). Available at Co 12 nsistent 401(k) D -Pl 30% efan aultParti Inves cipa tmen nts’ Us t Optioe n U of s TDF ed fos r Automatic Deferrals ThesT eD shif F alts loc undersc ation. Age ore gro that ups a moving re based aw on p ay art ifrom a cipant ag TD e aF do t yeaes not r r-end 201efl 6. ect a single behavior. Rather, it highlights how For example, see Investment Company Institute and ISS Market Intelligence 2025; BrightScope and Investment Company Tenure >30 >20 to 30 >10 to 20 >5 to 10 >2 to 5 0 to 2 All 40 • The other category is the residual for other investments, such as real estate 1funds. equities i GICs are insu Eachn th 401(k) eir i ran nv part ce co estment portfol icip mpan ant’s allo y products that gu io. Trad cation to itioeq nau l IRA- ara ities ntee is cal owa sp ning h culat eciousehol fic rate of ret ed as the ds ten sum urn d to be o of on the in : lder than vested capital o Roth IRA-o ver wning househ the life of the olds growth toward income over time as the fund approaches and passes its target date. They have gained significant ww Notw.d e: Pa ol. rtic gov/ ipans tsites/dolg with a fullov -TD /fF il es/EBSA allocation /a habou d 10t0- eb perc sa e/our nt of -tact heir ivities/res 401(k) planourc balae n- cce e inter/ nveste fact d in- ts aheets/d rget dateefau funds lt.- investment- 401(k) Participants Who Move Away Pe F rce rom nt a a F ge u llo -TD f pF laPos ns ition Ten with autd om toa Adjus tic en t T ro hleir lme En qu t ities Allocations ..................... 10 Choukhmane, The EBRI partici So pan urc/ICI 401 e ts : T div a bTaha, u erge lat(io k) n f d s a rom nd Tim fat rom aba t h EBR e s d eg, b Ilide e /IC Si ui I Pa lva. lt f path rtrom ic 202 ipto a nadmini p 4. t-D urs “ ire W u ch te s eat Dr trat ds trat Re ive tives ire e records gi mes l In ent ves ikely Plan of tor Dbe a s401(k t' a tt P C er al ort oll)folio e plans, cign tione C Pro d wit hoice o je ff ch ers ts? Sep the a broad ir iarat ndivi ing sn dual goals apshot Risk P of re— fere plan whnc ether es Institute 2025; Holden, Bass, and Copeland 2025a; and Investment Company Institute 2025. 20s 48 50 62 56 Investment Company Institute. 2025b. “Quick Facts on Target Date Fund Use in Retirement Plans.” Available at Focusing on the oldest participants further highlights this trend. Across all tenure groups, when older 401(k) an contract. d tend to Th re e sport amp highe le is 0.7 r own millioersh n con ip rates i sistent 40 n f 1(k ix ) ed pa-rt inco icipa me nts inves who w tments (ann ere fully inves uiti tedes; ba in targnk o et dar sav te funings acc ds at yea ounts; individu r-end 2016, al traction in 401(k) plans, both as default investment options and through 401(k) participant choice. The growth in TDF alternatives.pdf. 42 that means from Fr seeking ictions high .” NBER er returns, Work de ing -r Pap isking er No. ahea 32 d 4 o76 ( f retirement, May). Cambrid or simply ge, M wa A: N ntin atio g mo nal Bu re contro reau o l f ov Ec er ono or mic participants at the end of each year. It includes a wide range of workers—from recent hires, whether younger or older, • The final category, unknown, consists of funds that could not be identified. 30s 23 40 47 58 42 13 Ongoi Appendixng ................................ 401(k) Partici ................................ pants Tend to Remain ................................ Invested ................................ in TDFs ............................. 15 ww draw w.ici.org n from th/s e ys 2.1tem/fil million es 40/2 1(k 0) 25 pla -n 12/2 part5 ic-ip ic ain -q tsuick with- facts accou-n targ t balet an-cdat es e at- funds the end - retireme of each ye nt.pdf ar from . 2016 through • Company stock. The percentage of their 401( k) account balance invested in the stock of their employer. For example, Madrian and Shea 2001 shows that a substantial fraction of 401(k) participants hired under automatic partici bonds), pan whic ts a h ma djust y re edflect the their TDF all ir antici ocat pated or already ions, they were oc curring distri more likely to butio elimin ns. Se ate Figure e TDFs fA16 in Hol rom their p den ortan folios ent d Schrass ire 20 ly, rather 25. use reflects a combination of regulatory developments, 401(k) plan design innovations, and 401(k) plan participant 41 18 2002 2006 2007 2008 2016 2022 2023 to longer pe Other stable v rsonaliResearc - zatio tenun red employ alue f of h. their Availab unds i asees sle nclude sy e at t all — and ocat ww a w nt ions llows .nbe hetic GICs, . TDF r.or for d g/pap s of eta whic fer ile ers d di h co /w324 v cro ers nsist of a portfol ss ifi -76 cation sectional a . and re nalys iobal of fixed is. ancin Ho g ov -inc we ome securiti er time. ver, thes An e an es d th n “w ual ey also o rappe snad” wi pshots ffer th a have 2022. Age and tenure groups are based on participant age and tenure at year-end 2016. The tenure variable is generally 40s 10 18 36 44 55 31 Among full-TDF consistent participants in their 20s, an estimated 100 percent had more than 80 percent of their 401(k) enroll A largment exh e majority ibi of t defa cons ult beh istenav t 401(k ior, sti )cking t partico bo ipants th th who we e defare ult co fullntributio -TDF inv nest rate a ors nd th at year e d-efa end ult fu 2016 nd a cont llocinu atio en d (o to ver be th fue ll- than Furthermore, in shift to a p 2024 artia, 69 l allocati percent on (of traditi Figure 5) ona . The l IRA se – ow findin ning h gs ousehol align with ds indicated they established resea have a rch on strateg inves y to mana tment be ge in havior come an as d References ........................................................................................................................................................... 18 behavior. Stable Value Fund 31.5 19.2 6.3 2.3 2.9 1.9 0.7 years working at curre2 n0 t s employer and t3 hu 0ss may overstate4 y 0es ars of participa5 ti0 on s in the 401(k) p 6l0 an s. All gua fle xiran bility for tee (typi 401 call (k y by ) pl an an par insu ticipants rance compan wantiy ng or a ban to step k) to off provide benef their glide pat it paymen h to tailor th ts acco eir ass rding to et all the p ocatilan a on to th t boo eir k v oal wue. n 31 Inves limitations tment wh Co en mpany I it comes nst to itut studyin e and IS g S Mar how indiv ket Intel idual par ligenc ticipants ma e. 2025. The I nage CI/ISS their MI Defi investments ned Contri over t bu ime, such tion Plan as Pro lo fil ng e: A - • Equity 50s funds. The perc11 entage of th 12 eir 401(k) acco 20 unt balance 38 invested in 44 equity fun53 ds. 30 accounts invested in equities at the end of their last year before moving away from a full-TDF allocation (“before”). TDF 1997 - inv 1999 estors pe rio at each d analyz year ed) -e eve nd n th from ough 201 v7 ery through few emplo 202yee 2. A s hired be mong the fore au consis to tent matic enrol 401(k) lment pic plan parti ked cip this particular ants who were full- ass ets in retirement. Focus on reviewing their asset allocation as part of their strategy varied with age: 53 percent of ind No ivi tes duals age and approach retirement. At this point in the life cycle, financial needs in retirement become more Clark, Jef Monfrey ey M W ar. k20 et 2 F5 u. nd How America Saves 202 25.5 9. Valley F 6or .4ge, PA: T 1.h 0e Vanguard 1.3 Group, Van 7.0 guard 1 Ce .7nter for 1.6 Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project Notes .................................................................................................................................................................. 20 term indivi decis dual g ions oals i an nvolv d n in ee g TD ds. F s. This is because the composition of the database changes every year: the selection of Clos60s e Look at ERISA 40312 (b) Plans, 215 022. Washin22 gton, DC: In38 vestment Compa 43 ny Institute and 49 San 30Diego, CA: 42 2 Among those who moved away from a full TDF allocation, 61 percent maintained more than 80 percent of their account Hire Year outco Some reco me. Cho rdke i et al. epers s 1 2004 986 upplyi o doc r Eaumen ng d rlier ata ts, for 40 were u 1(k) nable to partici provide co pants, the p mplete asset a ersistence of def llocati au on detail lt savings b on certain poo ehavior over led asset cl the 1997-2000 asses TDF In traditi term inv onal IRA s est ofors re– gu at year ow latory ning h - en de ousehol d ve 2l01 opments 6 ds y , 96 ounger pe , 1 rce t 9he 86 nt than - Pension 1w 9ere 9 35 wit 6 stil Prot h a l fu e 1 llstrategy ction Act o 9 -T 96 DF -2 invest 00 indic 6 f 20 or ated th s06 at 2 (0 year P0 ey re PA) 6-- 2 , en 0 view alon 1d 2017, a 1 ed the g with ir asset 2nd 85 s 0u 1bseq 1-2 0 pe allo uent De 14 rce cati nt on, rema partm co 20m 1 ined 4 pared ent -20of 1 6 imminent and salient, prompting individuals to actively adjust their portfolios to better align with their specific income *EqB uia tie la sn ic ne cld u d F eu e nq d uity funds, company stock, and2 t2 h.e 2 equity po 1rt 4i.o 6 n of balan 1c 6e .0 d funds. F 1o 3 r .a 0dditional1 d4 e.t8 ail, see the6 b .1 ox on page6 1 .7 4. Retirement Research. Availa ble at https://institutional.vanguard.com/insights-and-research/report/h 19ow- • Equity portion of TDFs. The percentage of their 401(k) account balance estimated to be invested in equities data provid ISS Market ers and sampl Intellie gence. of plans usi Availab ng a le at give https: n prov //ww ide w.ici.org r vary an /sd 40 ystem/fil 1(k) p es/ artic 202 ip5a-nts 08/25 join -rpt or l -dc eave plan p -pro lans. file22 As - a result, All 10 11 20 38 46 56 36 in equities at the year-end in which they moved away 22(“after”) (Figure 6). Another 22 percent held between 60 percent Y ears of Tenure 29 perio for one or mor d analyzed e of their cl . ients. The final EBRI/ICI 401(k) database includes only plans for which at least 90 percent of all plan wi full Labor th 76 -TD(F inves DOL) percent rteg ors of those aged 5 ulat through ye ions, prov ar id 0 to 64 ( -ed en l d 20 egal see Figure A33 22 cl arity (Figure 2) and f.id in uc THo iary sup wo caveats lden an port d S a cfor i pp hraly, ss 20 nnovatio both 25). o f whi ns i n ch may 401(k) p lead lan design to an ov —e partic rstate ularly ment need 1 sL , ri ife ss k tol tyle erance, Fund and time horizons. Hence 14.8, older 2 42 01 .8(k) partici 21.pa 0 nts often 17.9 seek great 3.8er control over t 2.8 heir 0 a .7sset >30 >20 to 30 >10 to 20 >5 to 10 >2 to 5 30 0 to 2 Overa Note ll, : Tth america he is a sam nalys p- les aves is is fi 0.1n - m 2025.htm ds t illiohat while n consli.s te mos nt 401t 4 (k) 0 p1( artk ic)i pfull ant- sT w DF inves ho had a tor full-T s d Display pers F allocation a ist t ye ence ar-enin d 2 usi 016 ng T andDFs mov e ov d er aw the ay fro six m tyears hat For detail on TDF design, see Investment Company Institute 2025a. For more background on TDFs, see also Brien et al. through TDFs is based on the industry average asset allocation for the TDF appropriate to their age. changes observed in the full database do not necessarily reflect the behavior of individual participants over time. 403b.pdf. 3 and 80 percent in equities, while the remaining 17 percent held 60 percent or less, including 5 percent who held no assets could be identified. of around pers Pist defau roence fessilt i o in nnves ahol lly M di tm a nn ent g ag ae o s dpe ptions an Acif ccic ouTD nt d aut F. Firs om t, atic enro N 40 /A 1(k) pll ar ment. ticipants 3.7 Mor who e sp 4. inv 0ecifi est caed lly, 2in .th 9a e PPA nd exite directe 6.d TD 1 d Fs the prior 2 D .8OL to to year de2 -ve .elop 5 nd 14 allocation, allocationwhic prior h to coul year-e d n lead d 20 2 them to mov 2. The changee in aw alloay ca f tio rom n to e Tq DFs uitie, s whi is cch alc udo lat n edot al as thlow e pe f rc or encus t difftom erenization beyond ce between the p th erceir entage of 27 2010; Hol Figures studi The media ed, a den, V s ignificant n tean nuDer re among A min hei, and ority adjust Bass 202 merican wo th 1; Ho eir alloca rkers lden, B age tions d 25 or o ass, and Copel . Olde lder w r 401(k an as 4 d 202 ) pl .8 years an 4a; In partin 2024 (se icip vesa tme ntsnt Company were e Co the peland a mos Inst li ti ntute d T kely hephasit 2025b to move ; an 20 aw d 25). ay See Figure A4 for additional information. Note: Participants with a full-TDF allocation had 100 percent of their 401(k) plan balance invested in target date funds. The equities at all. the participant’s account balance invested in equities at the final year -end before the participant exited a full-TDF allocation compared 20 gu 1 idelin 6 ar Tae excl es for rget Rud e di tivers e re d from me ified nt D th def ate e sample ault inv and a estments re h (e N th nce /A e i n nves ot c tm 3 ounted 0ent .6 option in as l4 ack 8.7to whi ing pec rs h 5ist 9a .7 p enc are. ticipant Seco 63.7 nd ’s contr , reallocations 8 ib 4utions .7 w with oul 86.d in 0 ba e Note: Pa Copeland, C rticipants withrai a g, full-T an Dd Sam F alloca ita tionThephas had 100 p it. erc 2025. ent of t“T her ir end 401s (k i) np Employee lan balance Te invenure, 19 sted in targ 83 et– d 2024,” ate fund EBRI s. The Iss sam ue pl e Bri is ef 0.,7 n mo. illio 632 n consistent predetermined glide path. • Equity portion of non–target date balanced funds. The percentage of their 401(k) account balance from Th Hoere is also e lden, B a full ass -T, Dan vidence of recen F al d Co locatio peland n an 2025. d t jo ha b cha d the wi nge damong ol est variation der 401 in the (k) partici ir allocati pan ons ts in the EBRI/ to equities, ICI 401(k) databa which highlightsse. Fo the import r example, ance in Madrian, To addres B sri th gie tte limitat , and ion Denn s inis F. Shea herent in snap . 2001 s. “ hots The , the Pow ana er lys of is in Sugges thistion: pape In r ertia uses i a lon n 401 gi (tud k) Pinal artici pa patio nel of n consis and Savi tent ngs sample is 2.1 million 401(k) plan participants with account balances at the end of each year from 2016 through 2022. Age 28 with the following year -end. Age groups are based on participant age at year-end 2016. 401(k) p a rtS ic ee Figure A4. ipants who we re fully invested in target date funds at year-end 2016, drawn from the 2.1 million 401(k) plan participants with account balances at Figure 1, Othe Maj r ority of Consistent Participants Hold Targ 5.6 et Date 2.7 Funds3 ................................ .0 2.9 1 ................................ .7 N/A 1......... .8 6 pl giace vend, year in (Marc th or e a be hbsence )tw . W een ashin d of iff ot gton, erher ent D iTDF nves C: Esmployee tm wen ithi t in n a B struct 100 ene fit ions peR rce esear from nt T the ch DF Ins al plocati artic titute ip on are . Availa ant) that nbl ot c e w at ap ould ww tured receiv w.ebr in the e i.org/ so EBRI/ me p docs rot ICI /de ection 401 faul( t- k und ) er estimated to be invested in equities (based on industry average asset allocation) through these balanced the sample ana and tenu lyze re gd, 23 roups perce are bant se d of fu on p lla -rt TD iciF i panv nt a estors w ge and te ith tw nure a o years t year-e nor l d 20 ess 16 . of tenu The tenre at year ure variable- end is ge2016 nerallywere aged 5 years working 0 or partici of preserv pants in— g thos flexibi e lity who mai in reti ntaine rement d acco invest unts ment o continu ptions. ously from year-end 2016 through year-end 2022. Among the 2.1 Behavior.” The Quarterly Journal of Economics 116 no. 4 (November): 1149–1187. 2 Among older 401(k) participants, there is clear evidence of diverse reallocations. Participants in their 40s, who as a the end of e So acu hrc ye e:a T r a fro bu m la 2 tio 0n 1s 6 ftro hro m u g EBR h 20 I/2 IC 2.I A Pa ge rt ia cn ip da tn etn -D ure ire g cro ted u p R se a tire re m ba es ne t d Pl o a n n p D aa rttia c ip Ca on llte a cg tie o n a n Pro d te jen cu tre at year-end 2016. The tenure variable is For a comprehensive background on 401(k) plans and their complex legislative and regulatory history, see Holden, Brady, ER database 29 ISA’s fi,du so such ch ciary standar anges a ds. As pp a ear r as co esult, inti n 2 nuous T 007, the DF D u O sL iss e. ued guidance that indicated balanced funds, TDFs, and astource/e current ebri mp-liss oyeue r a-nbrief/ d thuseb mri ay _i ob_ ve6 rs32_ten tate yeaure rs o- f 27 pama rticip r25. ation pdf in . th e 401(k) plan. ol der, i See n ndicatin ot fun e 26 ds. .g jo b transitions even at later stages of participants’ careers (see Figure A2). N/A = not available 32 generallmillion y years w co ork nsis ingtent at cu4 rre 01(k) nt em pla ployn er part and icip thusa m nts ay in ove th rse taEBRI te yea/IC rs oI 4 f pa 0rt 1( ick ip)a tdata ion inb tas he e 4 0who 1(k) maint plan. ained 401(k) accounts from year- Fi group he gure 2, ld th 401(e k) wPart idest icip rang ants e T ofe p nd to R re-TDF em -exi ain t eq in uT ity allo arget cations Date Fu , n ds also ................................ made varied adjustments ................................ to their equity e.......... xposure 7 and Hadley 2006. For a discussion of the Pension Protection Act (PPA) of 2006, which called for the U.S. Department of Labor 4 professionally Source :manage Tabulatiod nsac fro counts m EBR coul I/ICI Pa d be us rticipan ed t-D as ire q cte ua d R lifeied tire m de en faul t Pla t i n nv Daest ta C ment alt ollection ern Projatives ect (QDIAs). Although TDFs Morningstar. 2022. Morningstar Lifecycle Allocation Indexes (June). Chicago: Morningstar, Inc. Source: Plan Sponsor Council of America, Annual Survey of Profit Sharing and 401(k) Plans Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org ebri.org Is Is Is Is Is Is Is Is Is Is Is Is Is Is Is Is Is Is Is Is Is Iss s s s s s s s s s s s s s s s s s s s s sue B ue B ue B ue B ue B ue B ue B ue B ue B ue B ue B ue B ue B ue B ue B ue B ue B ue B ue B ue B ue B ue Bri ri ri ri ri ri ri ri ri ri ri ri ri ri ri ri ri ri ri ri ri riA ef ef ef ef ef ef ef ef ef ef ef ef ef ef ef ef ef ef ef ef ef ef resea • • • • • • • • • • • • • • • • • • • • • • May May May May May May May May May May May May May May May May May May May May May May rch repo 28 28 28 28 28 28 28 28 28 28 28 28 28 28 28 28 28 28 28 28 28 28, 20 , 20 , 20 , 20 , 20 , 20 , 20 , 20 , 20 , 20 , 20 , 20 , 20 , 20 , 20 , 20 , 20 , 20 , 20 , 20 , 20 , 20rt 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 from the E • • • • • • • • • • • • • • • • • • • • • • No. 6 No. 6 No. 6 No. 6 No. 6 No. 6 No. 6 No. 6 No. 6 No. 6 No. 6 No. 6 No. 6 No. 6 No. 6 No. 6 No. 6 No. 6 No. 6 No. 6 No. 6 No. 65 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 58 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8BRI E ducation and Re search Fund © 2026 Employee Benefit Research Institute 15 13 14 19 22 17 23 10 18 12 21 16 20 11 6 5 3 8 9 7 4 2 Age Age Age Age 80% 80% 10% 9% 20% 7% 13% 20% 80% 82% 10% 9% 20% 86% 7% 11% 18% 5% 10% 14% 84% 9% 7% 16% 8% 5% 87% 13% 9% 5% 13% 87% 8% 3% 11% 89% 6% 9% 16% 7% 5% 12% 84% 8% 4% 12% 88% 8% 4% 12% 8% 3% 11% 88% 88% 6% 10% 16% 89% 8% 6% 14% 9% 5% 15% 10% 5% 15% 84% 5% 10% 14% 86% 85% 8% 13% 21% 85% 11% 7% 18% 13% 7% 19% 86% 6% 13% 19% 12% 6% 18% 79% 82% 81% 81% 82%