participants who were eligible for loans had loans outstanding against their 401(k) plan accounts, down from year-end 2019. Loans outstanding amounted to 8 percent of the remaining account balance, on average, at year-end 2020, the same as year-end 2019, and well below their historical average. Loan amounts, on average, increased in 2020, but remained small relative to the remaining account balance. Contact us: 202-371-5413 or media@ici.org “Even during the turmoil of the COVID-19 pandemic and loosening of the regulations around plan EBRI/ICI Study Shows 401(k) Participants’ Asset Allocations loans in 2020, the percentage of 401(k) plan participants eligible to take a loan who had an outstanding loan balance declined slightly in 2020 from 2019, to a level last see in the early 2000s,” Favor Investment in Equities said Craig Copeland, EBRI Director of Wealth Benefits Research. “At year-end 2020, only 16 percent of 401(k) participants who were eligible for loans had loans outstanding against their 401(k) Washington, DC; November 29, 2022—According to a new joint study from the Employee plan accounts, showing the ability of 401(k) plan participants to hold their course in preparing for Benefit Research Institute (EBRI) and Investment Company Institute (ICI), entitled “401(k) Plan retirement during unprecedented times.” Asset Allocation, Account Balances, and Loan Activity in 2020”, at year-end 2020, 42 percent of 401(k) plan participants’ account balances were invested in equity funds, on average, in line with About the Study recent years. Another 35 percent of 401(k) participants’ account balances were invested in balanced The study is based on the EBRI/ICI database of employer-sponsored 401(k) plans, compiled funds, largely target date funds. through a collaborative research project undertaken by the two organizations since 1996. The project is unique because it includes data provided by a wide variety of plan recordkeepers and, “Our research finds that younger 401(k) plan participants today are much more comfortable holding therefore, represents the activity of participants in 401(k) plans of varying sizes—from very large a significant portion of their savings in equities,” said Sarah Holden, ICI Senior Director of corporations to small businesses—with a variety of investment options. The 2020 EBRI/ICI Retirement and Investor Research. “At year-end 2020, nearly 80 percent of 401(k) plan database includes statistical information on 11.5 million 401(k) plan participants in 76,507 plans, participants in their twenties had more than 80 percent of their account balance invested in equities, which hold $1.0 trillion in assets, and covers 19 percent of the universe of active 401(k) compared with less than half prior to the global financial crisis.” participants. Key findings in the report include: Full results of the annual EBRI/ICI 401(k) database update are posted on each organization’s website at www.ebri.org and www.ici.org/research/investors/ebri_ici. • Younger 401(k) plan participants tend to be invested more in equities than older 401(k) plan participants. On average, at year-end 2020, 69 percent of 401(k) participants’ assets –ICI– were invested in equity securities through equity funds, the equity portion of balanced funds, and company stock. Younger participants, as a group, had more than 80 percent of FOLLOW US ON: ICI.ORG @ICI INVESTMENT COMPANY INSTITUTE ICIVIDEO their 401(k) plan assets invested in equities, compared with 56 percent of 401(k) plan assets among participants in their sixties. • Ownership of investments in equities is widespread among 401(k) plan participants. Overall, 94 percent of 401(k) participants had at least some investment in equities at year- end 2020. More 401(k) plan participants held equities at year-end 2020 than before the global financial crisis (year-end 2007), and most had the majority of their accounts invested in equities. • Target date funds continue to be an often-used investment option among 401(k) plan participants. At year-end 2020, 86 percent of 401(k) plans, covering 87 percent of 401(k) plan participants, included target date funds in their investment lineup. Target date funds were 31 percent of the assets in the EBRI/ICI 401(k) database, and 59 percent of 401(k) participants in the database held target date funds. Also known as lifecycle funds, these funds are designed to offer a diversified portfolio that automatically rebalances to be more focused on income over time. • 401(k) plans draw in many young retirement savers and new hires . At year-end 2020, 38 percent of 401(k) plan participants were in their twenties or thirties, and 24 percent were in their forties. Forty-three percent of 401(k) plan participants had five or fewer years of tenure, including about one-fifth who were recent hires (two or fewer years of tenure). • 401(k) plan loans are widely available but rarely taken. At year-end 2020, 84 percent of 401(k) plan participants were in plans allowing loans, but only 16 percent of 401(k)