401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 1999

The Employee Benefit Research Institute (EBRI) and the Investment Company Institute (ICI) have been collaborating for the past four years to collect data on participants in 401(k) plans. This effort, known as the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project, has obtained data for 401(k) plan participants from certain of EBRI and ICI members serving as plan record keepers and administrators.

The EBRI/ICI database is large and representative of the 401(k) plan participant universe, as it pulls data from a variety of plan record keepers and administrators and covers a wide range of plan sizes. This report includes 1999 information on 10.3 million active participants in 32,674 plans with $573.4 billion in assets. The 1999 EBRI/ICI database accounts for 11 percent of all 401(k) plans, 26 percent of all 401(k) participants, and about 35 percent of the assets held in 401(k) plans. Key findings include:

• For all 401(k) participants in the 1999 EBRI/ICI database, three-quarters of plan balances are invested directly or indirectly in equity securities. Specifically, 53 percent of plan balances are invested in equity funds, 19 per-cent in company stock, 10 percent in guaranteed investment contracts (GICs), 7 percent in balanced funds, 5 percent in bond funds, 4 percent in money funds, and 1 percent in other stable value funds.
• The average account balance (net of plan loans) for all participants was $55,502 at year-end 1999, which is 18 percent higher than the average account balance at year-end 1998. The median account balance was $15,246 at year-end 1999, which is 17 percent higher than the median account balance at year-end 1998. The reported account balance represents retirement assets in the 401(k) plan at the participant's current employer. Retirement savings held in plans at previous employers or rolled over into individual retirement accounts (IRAs) are not included in this analysis.
• Investment options offered by plan sponsors influence participants' asset allocation. Participants in plans not offering GICs or company stock tend to have the highest allocations to equity funds. Participants in plans offering GICs but not company stock have lower allocations to bond, money, and equity funds. Alternatively, participants in plans offering company stock (but not GICs) have substantially lower allocations to all other investment options, especially equity funds.
• The asset allocation of participants' account balances varies with age. Younger participants tend to concentrate their assets in equity fund investments, while older participants invest more in fixed-income securities.