401(k) Information From The Investment Company Institute

The following was published by The National Association of Plan Advisors (NAPA) on August 12, 2017.



The Investment Company Institute recently published a list of frequently asked questions about 401(k) plans. Here’s our version of that list.

How much money is in 401(k) plans?

As of March 31, 2017, 401(k)s held an estimated $5.0 trillion in assets – nearly 20% of the $26.1 trillion in U.S. retirement assets, which includes employer-sponsored retirement plans (both defined benefit and defined contribution plans with private- and public-sector employers), IRAs and annuities. That’s up from $2.8 trillion and 17% of the U.S. retirement market in 2006.

How big are retirement accounts in terms of the mutual fund industry?

Mutual fund assets held in retirement accounts (IRAs and DC plan accounts, including 401(k) plans) stood at $8.0 trillion as of the end of March 2017. That’s nearly half (47%) of overall mutual fund assets. Looking only at 401(k)s, fund assets in 401(k) plans stood at $3.2 trillion, or 19% of total mutual fund assets as of March 31, 2017.

How many Americans have 401(k)s?

In 2015, about 55 million American workers were active 401(k) participants, and there were nearly 550,000 401(k) plans.

What is the average 401(k) plan account balance?

While that is a widely reported number, it’s pretty irrelevant. Consider instead that in the EBRI/ICI 401(k) database, at year-end 2014, participants in their 60s with more than 30 years of tenure had an average 401(k) plan account balance of nearly $275,000.

At the other end of the savings spectrum, those in their 30s with two to five years of tenure had an average 401(k) plan account balance of close to $25,000.

Does age affect a 401(k) participant’s asset allocation?

Yes – although these days that may have as much to do with the propensity to automatically enroll and default investments into qualified default investment alternatives (QDIAs) like target-date funds. Interestingly enough, older participants are less inclined to invest in target-date funds – and, by virtue of being less likely to be “new” hires, less likely to be defaulted there.

How many participants borrow against their 401(k)s?

The EBRI/ICI 401(k) database reveals that about 87% of 401(k) participants were in plans that offered a loan option in 2014, and only 20% of those eligible for loans had loans outstanding. At the end of 2014, the average unpaid loan balance was $7,780, about 11% of the participant’s remaining account balance.

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Andy Paladino is an investment adviser representative of, and securities and advisory services are offered through, USA Financial Securities Corp., Member FINRA/SIPC. www.finra.org A Registered Investment Adviser located at 6020 E. Fulton St., Ada, MI 49301. Paladino Financial Group is not affiliated with USA Financial Securities.

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