Facts from EBRI
401(k) Plan Account Balances,
Asset Allocation, and Loan Activity
Plan Year 1996
The average account balance (net of plan loans) for all
participants in the EBRI/ICI database was $37,323, and the median
account balance was $11,600.
The average account balance increases with age and job
tenure. The average account balance for a person in his or her
20s who has been at the current job for two years or less was
$3,003.74. The average account balance for a person in his or her
60s who has been at the current position for more than 30 years
Most 401(k) accounts have low account balances.
Forty-seven percent of 401(k) accounts had an account balance of
less than $10,000. Twenty-eight percent of accounts had a balance
of $10,000 through $40,000. Only 9.8 percent of 401(k) account
balances were more than $100,000.
Participants in the 401(k) plans in the 1996 EBRI/ICI
database had, on average, 44.0 percent of their plan balance
invested in equity funds, 19.1 percent invested in company stock,
15.1 percent in guaranteed investment contracts (GICs), 7.8
percent in balanced funds, 6.8 percent in bond funds, 5.4 percent
in money funds, and 0.8 percent in other stable value funds.
Participant asset allocation varies considerably by
age. Younger participants tend to invest a greater percentage of
account balances in equity funds; older participants are more
disposed to invest in GICs. On average, participants in their 20s
have 55.1 percent of their account balances in equity funds,
compared with 33.9 per-cent for those in their 60s. Participants
in their 20s invest 7.8 percent of their account balance in GICs,
and those in their 60s invest 26.1 percent.
In plans where employer contributions are required to
be invested in company stock, the allocation of assets differs
markedly from the allocation of assets in plans where the
participant can direct both his or her own and the employer's
contribution. In plans where the employer contribution is
allocated to employer stock, 54.6 per-cent of total account
balances are invested in company stock. When examining only the
participant-directed portion of these accounts, 32.7 percent of
the participant-directed portion of the accounts is invested in
company stock. In contrast, where plans offer a company stock
investment option but the employer contribution is not required
to be invested in company stock, 19.9 percent of the total
account balance of these accounts was invested in company stock.
Of the 27,762 401(k) plans in the EBRI/ICI database, 52
percent offered a plan loan to participants. The loan feature is
primarily associated with large plans. In the database, more than
90 percent of the plans with more than 10,000 participants
offered borrowing privileges to employees. In contrast, only 43
percent of the plans with 10 or fewer employees had the loan
The concentration of loans in large plans means that
most participants in 401(k) plans have borrowing privileges. In
the database, 70 percent of participants were in plans offering
loans. However, only 18 percent of those eligible for loans had
loans outstanding at the end of 1996.
Loan activity varies by age. Individuals in their 40s
(22 percent), 30s (20 percent), and 50s (17 percent) were most
likely to utilize the loan provision. Twelve percent of
participants in their 20s had loans outstanding, and 9 percent of
persons in their 60s had loans outstanding.
Loan activity varies by job tenure. Individuals with
1020 years of job tenure were most likely to have a loan
outstanding (27 percent), followed by individuals with 2030
years (25 percent). Individuals with 0 to two years of job tenure
were least likely to have a loan outstanding, 6 percent.
For those with outstanding loans at the end of 1996,
the average level of the unpaid loan was 16 percent of account
This loan ratio decreases with age, dropping from 30.0
percent for participants in their 20s to 9.8 percent for those in
their 60s. This loan ratio also decreases with job tenure,
dropping from 27.3 percent for individuals with less than two
years of tenure to 7.4 percent for those with more than 30 years
of job tenure.
For more information, contact Ken McDonnell, (202) 775-6342,
or see EBRI's Web site at www.ebri.org.
Source: Jack VanDerhei et al., 401(k) Plan Asset
Allocation, Account Balances, and Loan Activity, EBRI
Issue Brief no. 205, January 1999.
Data are from the EBRI/ICI Defined Contribution and
Participant Behavior Research Project. The Employee Benefit
Research Institute (EBRI) and the Investment Company Institute
(ICI) obtained data for 401(k) plan participants from some of
their sponsors and members serving as plan record keepers and
administrators. The data include demographic information, annual
contributions, plan balances, asset allocation, and loans. The
report includes 1996 information on 6.6 million active
participants in 27,762 plans holding nearly $246 billion in
assets, and is by far the most comprehensive source of
information on individual plan participants.