Data and Research

ICI Report: How Participants Save in Their 401(k)

More than one-third of 401(k) plan participants are under 40, most receive plan contributions from their employers, and equities figure prominently in 401(k) plans, says a new report from ICI.

By Javier Simon | September 12, 2016
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The Investment Company Institute (ICI) with data from the Employee Benefits Research Institute (EBRI) recently published a new report highlighting 10 insights on 401(k) plans. Drawing from the organizations’ combined database, “10 Important Facts About 401(k) Plans” focuses on 401(k) balances, fund diversification and participant demographics among other topics.

1) 410 (k) Plans Hold the Largest Share of DC Plan Assets

Sixty-nine percent of defined contribution (DC) plan assets were held in 401(k) plans amounting to $4.7 trillion at the end of 2015, according to the Investment Company Institute (ICI). 403(b) plans held $.9 trillion in assets. The total amount held in defined contribution plans was $6.7 trillion, and total retirement assets in the U.S. accounted for $24 trillion, the firm found.

 2) More Than One-Third of 401(k) Plan Participants Are Younger Than 40

At year-end 2014, 37% of 401(k) participants were in their 20s or 30s, 26% were in their 40s, 26% were in their 50s, and 11% were in their 60s, the ICI found. 401(k) plan participants are slightly older than the broad population of private-sector workers, according to the report.  

3) Households From All Income Groups Hold DC Plan Accounts

Fifty-three percent of U.S. households that own a defined contribution plan account have incomes ranging from $25,000 through $99,999. Forty-one percent reported incomes of more than $100,000, while 6% had incomes less than $25,000.

4) Households Appreciate the Tax Treatment and Investment Features of Their DC Plans

Eighty-one percent of households with DC plan account-holders agreed that “the tax treatment of my retirement plan is a big incentive to contribute,” ICI found. Ninety-one percent of such account holders said their retirement accounts allow them to “think about the long term, not just my current needs.” The same percentage said, “payroll deduction makes it easier for me to save.”

 5) Most 401(k) Plan Participants Receive Contributions From Their Employers

Seventy-six percent of 401(k) plans received employer contributions in 2013, according to the ICI. The firm reports that “because larger 401(k) plans are more likely to have employer contributions, 88% of 401(k) plan participants were in plans with such contributions.”

NEXT: 401(k) Account Balances Rise With Participant Age and Length of Time on the Job