Administration February 15, 2007

EBRI: 68% of 401(k) Plan Assets Invested in Stock

February 15, 2007 (PLANSPONSOR.com) - 401(k) plan participants invest their money most heavily in stocks, which represented 68% of participant assets at the end of 2005 that were invested in equity funds and company stock, according to the Employee Benefit Research Institute (EBRI).

Reported by

Adrien Martin

Figures from the Washington, D.C.-based research group showed that 401(k) investment in company stock continued to fall, from 19% in 1999 to 13% in 2005. According to EBRI, the downward trend suggests a change in plan design away from company stock and a change in participants’ behavior.

Overall, asset allocation of 401(k) plan participants held steady from 2004 to 2005, with guaranteed investment contracts (GICs) and other stable value funds accounting for 13% of plan assets; balanced funds, 11%; bond funds, 10%; and money market funds, 4%.

Younger 401(k) plan participants tended to invest more heavily in equities than older participants, with participants in their 20s holding 52% of their account balances on average in equity funds, compared with about 38% of account balances for participants in their 60s.

The data are from the EBRI/ICI Participant-Directed Retirement Plan Data Collection Project, the nation’s largest repository of information about individual 401(k) plan participant accounts, according to a news release. A full report on the year-end 2005 data appeared in the August 2006 EBRI Issue Brief , available at www.ebri.org .