Consistent participation in 401(k) plans key to account balance growth, study finds

Those who kept contributing accumulated the most, according to the Investment Company Institute and the Employee Benefit Research Institute.

JUL 01, 2022

By InvestmentNews

Retirement plan participants who consistently participated between 2010 and 2019 accumulated sizable 401(k) plan account balances, says a study by the Investment Company Institute (ICI) and the Employee Benefit Research Institute (EBRI).

The average 401(k) plan account balance for consistent participants rose each year from 2010 through year-end 2019, except for a slight decline in 2018, the two organizations said in a press release.

“Overall, the average account balance increased at a compound annual average growth rate of 15.6% from 2010 to 2019, rising from $58,658 to $216,690 at year-end 2019,” the two groups said. “The median 401(k) plan account balance for consistent participants increased at a compound annual average growth rate of 18.8% over the period, to $108,433 at year-end 2019.”

The growth in plan account balances for consistent participants generally exceeded the growth rate for all participants in the EBRI/ICI 401(k) database. By year-end 2019, 53% of the consistent participants had account balances of more than $100,000, compared with about one-fifth of plan participants in the entire database.

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