EBRI Issue Brief

401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2019

May 3, 2022 33  pages


Key Findings:

  • The bulk of 401(k) assets were invested in stocks. On average, at year-end 2019, 68 percent of 401(k) participants’ assets were invested in equity securities through equity funds, the equity portion of balanced funds, and company stock. Twenty-nine percent of assets were in fixed-income securities such as stable value investments, bond funds, money funds, and the fixed-income portion of balanced funds.
  • More 401(k) plan participants held equities at year-end 2019 than before the financial market crisis (year-end 2007), and most had the majority of their accounts invested in equities. For example, about two-thirds of participants in their twenties had more than 80 percent of their 401(k) plan accounts invested in equities at year-end 2019, up from less than half of participants in their twenties at year-end 2007. Overall, nearly 95 percent of 401(k) participants had at least some investment in equities at year-end 2019.
  • At year-end 2019, 87 percent of 401(k) plans, covering 87 percent of 401(k) plan participants, included target date funds in their investment lineup. At year-end 2019, 31 percent of the assets in the EBRI/ICI 401(k) database were invested in target date funds and 60 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) participants’ investment in company stock continued at historically low levels. Five percent of 401(k) assets were invested in company stock at year-end 2019, in line with recent years. This share has fallen by 72 percent since 1999 when company stock accounted for 19 percent of assets.
  • A minority of 401(k) participants had loans outstanding. At year-end 2019, 18 percent of all 401(k) participants who were eligible for loans had loans outstanding against their 401(k) plan accounts, down slightly from year-end 2018. Loans outstanding amounted to 8 percent of the remaining account balance, on average, at year-end 2019, down 2 percentage points from year-end 2018, and well below their historical average. Loan amounts, on average, also decreased in 2019.
  • The year-end 2019 average 401(k) plan account balance in the database was 10.2 percent higher than the year before, but this may not accurately reflect the experience of typical 401(k) participants. Changes in a participant’s account balance are primarily due to the combination of contributions, investment returns, and withdrawal and loan activity. To understand changes in 401(k) participants’ average account balances, it is important to analyze a sample of consistent participants. As with previous EBRI/ICI updates, analysis of a sample of consistent 401(k) plan participants is expected to be published later this year.
  • The average 401(k) plan account balance tends to increase with participant age and tenure. For example, at year-end 2019, participants in their forties with more than two to five years of tenure had an average 401(k) plan account balance of about $43,000, compared with an average 401(k) plan account balance of more than $330,000 among participants in their sixties with more than 30 years of tenure.

Thanks to Adam Bensimhon, EBRI Data Compliance and IT Director, for data tabulations. And, thanks to Jack VanDerhei, former EBRI Director of Research, for his collaboration over the past 25 years on this project.