401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2006

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 2006, 50 million American workers were active 401(k) plan participants. By year-end 2006, 401(k) plan assets had grown to represent 16 percent of all retirement assets, with $2.7 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 2006. The report is divided into five sections: The first describes the EBRI/ICI 401(k) database; the second focuses on changes in participant account balances over time, analyzing a group of consistent 401(k) participants; the third presents a snapshot of participant account balances at year-end 2006; the fourth looks at participants' asset allocations; and the fifth looks at participants' 401(k) loan activity.

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

JEL Classifications: D31, G11, J26

Accepted Paper Series

Suggested Citation
VanDerhei, Jack, Holden, Sarah, Copeland, Craig and Alonso, Luis, "401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2006" . EBRI Issue Brief, No. 308, August 2007 Available at SSRN: http://ssrn.com/abstract=1005379

Who is Ready for Retirement, How Ready, and How Can We Know?

Research Report

Sophie Korczyk, Ph.D

January 2008