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).

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 .