401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2014. April 2016. EBRI Issue Brief #423. Executive Summary – “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 2014 update of these data and EBRI’s and ICI’s ongoing research into 401(k) plan participants’ activity.

• The bulk of 401(k) assets were invested in stocks. On average, at year-end 2014, 66 percent of 401(k) participants’ assets were invested in equity securities through equity funds, the equity portion of balanced funds, and company stock. Twenty-seven percent was in fixed-income securities such as stable-value investments, bond funds, and money funds.
• More 401(k) plan participants held equities at year-end 2014 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 20s had more than 80 percent of their 401(k) plan accounts invested in equities at year-end 2014, up from less than half of participants in their 20s at year-end 2007. Overall, more than 90 percent of 401(k) participants had at least some investment in equities at year-end 2014.
• More than 70 percent of 401(k) plans included target-date funds in their investment lineup at year-end 2014. At year-end 2014, 18 percent of the assets in the EBRI/ICI 401(k) database were invested in target-date funds and 48 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.
• A majority of new or recent hires invested their 401(k) assets in balanced funds, including target-date funds. For example, at year-end 2014, two-thirds of recently hired participants held balanced funds in their 401(k) plan accounts. Balanced funds comprised 42 percent of the account balances of recently hired 401(k) plan participants at year-end 2014. A significant subset of that balanced fund category is invested in target-date funds. At year-end 2014, 35 percent of the account balances of recently hired participants were invested in target-date funds.
• 401(k) participants’ investments in company stock continued at historically low levels. Only 7 percent of 401(k) assets were invested in company stock at year-end 2014, the same share as in 2012 and 2013. This share has fallen by 63 percent since 1999 when company stock accounted for 19 percent of assets. Recently hired 401(k) participants contributed to this trend: they tended to be less likely to hold company stock. At year-end 2014, less than 30 percent of recently hired 401(k) plan participants in plans offering company stock held company stock, compared with about 44 percent of all 401(k) participants.
• 401(k) participants were less slightly likely to have loans outstanding at year-end 2014 than at year-end 2013. At year-end 2014, 20 percent of all 401(k) participants who were eligible for loans had loans outstanding against their 401(k) plan accounts, down from 21 percent at year-end 2013, although up from 18 percent at year-end 2008. Loans outstanding amounted to 11 percent of the remaining account balance, on average, at year-end 2014, down 1 percentage point from year-end 2013. Nevertheless, loan amounts edged up a bit in 2014.
• The year-end 2014 average 401(k) plan account balance in the database was 5.4 percent higher than the year before, but may not accurately reflect the experience of typical 401(k) participants in 2014. To understand changes in 401(k) plan 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 account balance tends to increase with participant age and tenure.
• The average 401(k) plan account balance tends to increase with participant age and tenure. For example, at year-end 2014, participants in their 30s with more than two to five years of tenure had an average 401(k) plan account balance of close to $25,000, compared with an average 401(k) plan account balance of nearly $275,000 among participants in their 60s with more than 30 years of tenure.”