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2001 EBRI/ICI 401(k) Data Shows Small Changes

A more volatile and declining stock market did little to change 401(k) allocations in 2001 according to a new report from the Employee Benefit Research Institute and Investment Company Institute. The report, 401(k) Plan Asset Allocation, Account Balances and Loan Activity in 2001, found little had changed over the past six years with 70% of 401(k) assets invested directly or indirectly in equity.

However, the devil is in the details. Small changes were made in 2001. 401(k) investors on average allocated more to conservative investments. Allocations to Stable Value investments rose to 14% followed by bonds at 8% and money market funds at 5%. Additionally, equity funds (48%) and company stock (17%) declined slightly in 2001. Allocations to balanced funds remained flat at 8%.

See Figure 4 - 401(k) Plan Average Asset Allocation, 1996-2001.

EBRI found that the average account balance of participants declined by 4% for participants who consistently had balances throughout the database's six-year life. With that said, the average account balance at year-end for all participants who participated throughout the six-year period was $43,215. This decline was considerably less than US equities' decline of 12% for 2001. Participants may have faired better than equities since they made contributions over that same period of time.

EBRI found the average account balance for 2001 was $58,785 for participants who had a 401(k) balance at year-end regardless of their participation over the six-year life of the survey. Lastly, EBRI reports that as age and participation increases, so do 401(k) balances. The following table provides highlights of account balances.

Average Account Balances Among 401(k) ParticipantsPresent in 1999, 2000 & 2001, by Age
Average Account Balances (Dollars)
Age	1999	2000	2001
20s	$ 8,842	$ 11,235	$12,993
30s	33,055	34,757	34,884
40s	64,055	64,849	62,900
50s	100,410	98,099	92,468
60s	127,136	119,743	108,958
All	61,116	61,125	58,785
Change in Average Account Balance (Percentage)
	1999 to 2000	2000 to 2001	1999 to 2001
20s	27.1%	15.6%	47%
30s	5.2	.4	5.5
40s	1.2	-.3	-1.8
50s	-2.3	-5.7	-7.9
60s	-5.8	-9.	-14.3
All	0.01	-3.8	-3.8

As in previous years, the report found considerable differences as to asset allocation based on the age of the participants. Younger investors allocated more to stocks and less to conservative investments. As age increases, EBRI found an inverse relation to equity investments and an increasing allocation to conservative investments. Allocations based on age are highlighted here.

The EBRI/ICI report tracks the behavior of about a third of all active 401(k) participants?or 14.6 million participants holding more than $632 billion in assets. For more information or a copy of the EBRI Report, please go to: http://www.ebri.org/pdfs/0303ib.pdf or EBRI's March 2003 Issue Brief.

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