Employees with 401(k) plans put more of their money into target-date funds and were slightly less likely to have outstanding loans against their retirement balances.
That's according to the Employee Benefit Research Institute and the Investment Company Institute, which reported that among the trends they identified in 401(k)s during 2014 was a move back into equities — with more participants holding equities at year-end 2014 than before the financial crisis (year-end 2007).
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Not only did more than 90 percent of participants have at least some equity investments in their plans at year end, the report said, about three quarters of participants in their 20s had more than 80 percent of their 401(k) plan accounts invested in equities at year-end 2014, up from less than half of participants in their 20s at year-end 2007.
In addition, more than 70 percent of 401(k) plans included target-date funds in their investment lineup at year-end 2014; in fact, at year-end 2014, 18 percent of the assets in the EBRI/ICI 401(k) database were invested in target-date funds, and 48 percent of 401(k) participants in the database held target-date funds.
And new hires put money into balanced funds that included target-date funds, as well; at year-end 2014, two-thirds of recently hired participants held balanced funds in their 401(k) plan accounts. Balanced funds made up 42 percent of recently hired 401(k) plan participants' balances at the end of the year, with "a significant subset" of that category invested in target-date funds. At the end of 2014, 35 percent of recently-hired participants' account balances were invested in target-date funds.
But if participants were turning toward target-date funds, they were turning away from company stock; just 7 percent of 401(k) assets were invested in company stock at year-end 2014, the same as in 2012 and 2013. That's down by 63 percent since 1999, when company stock accounted for 19 percent of assets.
The number of outstanding loans was down as well, although not on the same scale. A fifth of all 401(k) participants eligible for loans had loans outstanding against their 401(k) plan accounts. That's down from 21 percent at the end of 2013, but up from 18 percent at the end of 2008. And while outstanding loans amounted to 11 percent of the remaining account balance, on average, at the end of 2014, down 1 percentage point from the end of 2013, the amounts of those loans were slightly higher in 2014.
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