401(K) Plan Asset Allocation, Account Balances, and Loan Activity in 2007

52 Pages Posted: 22 Dec 2008

See all articles by Jack VanDerhei

Jack VanDerhei

Employee Benefit Research Institute (EBRI)

Sarah Holden

Investment Company Institute

Luis Alonso

Employee Benefit Research Institute (EBRI)

Craig Copeland

Employee Benefit Research Institute (EBRI)

Date Written: December 2008

Abstract

Over the past two decades, 401(k) plans have grown to be the most widespread private-sector employer-sponsored retirement plan in the United States, and now serve as the most popular defined contribution (DC) plan, representing the largest number of participants and assets. In 2007, 48.5 million American workers were active 401(k) plan participants. By year-end 2007, 401(k) plan assets had grown to represent 17 percent of all retirement assets, with $3.0 trillion in assets. In an ongoing collaborative effort, the Employee Benefit Research Institute (EBRI) and the Investment Company Institute (ICI) collect annual data on millions of 401(k) plan participants as a means to accurately portray how these participants manage their accounts. This paper serves as an update of EBRI and ICI's ongoing research into 401(k) plan participants' activity through year-end 2007. The report is divided into four sections: The first describes the EBRI/ICI 401(k) database; the second presents a snapshot of participant account balances at year-end 2007; the third looks at participants' asset allocations, including a new analysis of 401(k) participants' use of lifecycle funds; the fourth focuses on participants' 401(k) loan activity.

As with previous EBRI/ICI updates, analysis of a consistent sample of 401(k) participants (those that have been in the same plan since 1999) is planned; this additional analysis is expected to be published early in 2009. It should be noted that the year-end 2007 401(k) data reported in this analysis, by definition, do not reflect market losses or participant account activity in 2008. The impact of the 2008 financial market performance on average 401(k) balances is strongly affected by age and tenure of the individual participant, and it would be inaccurate to make a single estimate of an average 401(k) account outcome for 2008.

Keywords: 401(k) plans, Asset allocation, Employment-based benefits, Pension plan assets, Pension plan loans, Retirement plans, Self-directed investments

JEL Classification: D31, G11, J26

Suggested Citation

VanDerhei, Jack and Holden, Sarah and Alonso, Luis and Copeland, Craig, 401(K) Plan Asset Allocation, Account Balances, and Loan Activity in 2007 (December 2008). EBRI Issue Brief, No. 324, December 2008, Available at SSRN: https://ssrn.com/abstract=1318375

Jack VanDerhei (Contact Author)

Employee Benefit Research Institute (EBRI) ( email )

1100 13th Street, NW
Suite 878
Washington, DC 20005-4204
United States

HOME PAGE: http://www.ebri.org

Sarah Holden

Investment Company Institute ( email )

1401 H Street, NW
Research Department
Washington, DC 20005
United States
(202) 326-5915 (Phone)

Luis Alonso

Employee Benefit Research Institute (EBRI) ( email )

1100 13th Street, NW
Suite 878
Washington, DC 20005-4204
United States
202-775-6315 (Phone)
202-775-6312 (Fax)

Craig Copeland

Employee Benefit Research Institute (EBRI) ( email )

1100 13th Street, NW
Suite 878
Washington, DC 20005-4204
United States
202-775-6356 (Phone)
202-775-6312 (Fax)

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