401(k) Account Balances Surged In 2003

The 2003 balance was up 17% from the 1999 figure of $65,572?or an annual increase of about 4%.

Younger workers fared much better than older ones, primarily because they contributed more to their accounts than did older workers, the report says.

The average balance for a worker in his 20s jumped 139% between the end of 1999 and 2003, overcoming losses from a stock market slump in that time. For workers in their 60s with 30 years’ tenure, account value fell by almost 16% in the period because of a combination of the market’s poor performance and plan withdrawals.

Despite market instability during this period, about two-thirds of 401(k) account assets were invested in stocks at year-end 2003, according to the report. About 45% of participants’ assets were in equity funds, 16% in company stock, 9% in balanced funds, 10% in bond funds, 13% in guaranteed investment contracts and other stable value funds and 5% in money funds.

Other findings from the 2003 EBRI/ICI 401(k) study:

• Participants’ allocations to company stock remained in line with previous years.
• About 18% of eligible participants had loans outstanding at year-end 2003, and the average size of the loan was about 13% of the account balance (net of the unpaid loan balance), a figure that is similar to what EBRI and ICI found in previous years.