Equities Continued to Attract Contributions

At the end of 2012, 61% of 401(k) plan assets were invested in equities, according to the Investment Company Institute’s 401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2012 report. This included equity funds, the equity component of target date and balanced funds, and employer stock.

Among participants who were below age 40, almost 75% of assets were in equities. Those in their 60s had less than half of their plan assets in this asset class.

Target date funds remained popular

Almost three-quarters (72%) of 401(k) plans had target date funds among their investment options at the end of last year. Target date funds were used by 41% of participants, and these funds held 15% of total 401(k) plan assets.

New hires chose balanced funds

More than half (54%) of the account balances of new hires in their 20s were in balanced funds, including target date funds, at year-end 2012. About 43% of the balances of this group were in target date funds.

Average account balance rose

Compared to the end of 2011, the average participant account balance rose 8% to $63,929 at year-end 2012. Of course, investment performance and many other factors affect account balances, so the average amount must be viewed with caution.

The Investment Company Institute (ICI) report, using data from the EBRI/ICI Database of 24 million 401(k) plan participants in nearly 65,000 plans, is at http://tinyurl.com/ICIPlanData2012.

The expected retirement age of workers continues to rise, according to the EBRI. Visit this snapshot report athttp://tinyurl.com/EBRIRetAgeRising.

For plan sponsor use only, not for use with participants or the general public. This information is not intended as authoritative guidance or tax or legal advice. You should consult with your attorney or tax advisor for guidance on your specific situation.

Kmotion, Inc., P.O. Box 1456, Tualatin, OR 97062; 877-306-5055; www.kmotion.com

© 2014 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this publication are for general information only and are not intended to provide tax or legal advice or recommendations for any particular situation or type of retirement plan. Nothing in this publication should be construed as legal or tax guidance; nor as the sole authority on any regulation, law or ruling as it applies to a specific plan or situation. Plan sponsors should consult the plan’s legal counsel or tax advisor for advice regarding plan-specific issues.