EBRI Issue Brief

401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2018

Mar 4, 2021 36  pages


Since 1996, the Employee Benefit Research Institute (EBRI) and the Investment Company Institute (ICI) have worked together on collecting and analyzing annual data on millions of 401(k) plan participants’ accounts. This report reflects the year-end 2018 update of these data and EBRI and ICI’s ongoing research into 401(k) plan participants’ activity.

Key Findings:

  • The bulk of 401(k) assets were invested in stocks. On average, at year-end 2018, 63 percent of 401(k) participants’ assets were invested in equity securities through equity funds, the equity portion of balanced funds, and company stock. Twenty-eight 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 2018 than before the financial market crisis (year-end 2007), and most had the majority of their accounts invested in equities. For example, about three-quarters of participants in their twenties had more than 80 percent of their 401(k) plan accounts invested in equities at year-end 2018, up from less than half of participants in their twenties at year-end 2007. Overall, more than 90 percent of 401(k) participants had at least some investment in equities at year-end 2018.
  • More than three-quarters of 401(k) plans, covering more than three-quarters of 401(k) plan participants, included target-date funds in their investment lineup at year-end 2018. At year-end 2018, 27 percent of the assets in the EBRI/ICI 401(k) database were invested in target-date funds and more than half 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 2018, in line with recent years. This share has fallen by 74 percent since 1999 when company stock accounted for 19 percent of assets.
  • A minority of 401(k) participants had loans outstanding. At year-end 2018, 19 percent of all 401(k) participants who were eligible for loans had loans outstanding against their 401(k) plan accounts, unchanged since 2016. Loans outstanding amounted to 10 percent of the remaining account balance, on average, at year-end 2018, up 1 percentage point from year-end 2017 but still below their historical average. Loan amounts also edged up a bit in 2018.
  • The year-end 2018 average 401(k) plan account balance in the database was 5.9 percent lower than the year before. This is consistent with stock market declines in 2018 but may not accurately reflect the experience of typical 401(k) participants. Among consistent participants in the EBRI/ICI database between 2010 and 2018, the average account balance was 0.7 percent lower at year-end 2018 than at year-end 2017. Changes in a participant’s account balance are primarily due to the combination of contributions, investment returns, and withdrawal and loan activity.
  • The average 401(k) plan account balance tends to increase with participant age and tenure. For example, at year-end 2018, participants in their forties with more than two to five years of tenure had an average 401(k) plan account balance of about $36,000, compared with an average 401(k) plan account balance of more than $306,000 among participants in their sixties with more than 30 years of tenure.