Target-Date Fund Use in 401(k) Plans

The August 2011 EBRI Issue Brief provides a detailed look at the use of target-date funds (TDFs) by participants in 401(k) plans.

EBRI’s analysis finds that 401(k) participants who invested in target-date funds (TDFs) overwhelmingly tend to stick with these investments over time. Just over 90 percent of 401(k) participants investing in TDFs in 2007 stuck with them through 2009, EBRI found. Using a proxy for the auto-enrollment status of participants, those identified as auto-enrollees were even more likely to have stayed with TDFs, at a rate over 95 percent.

EBRI’s research finds that 401(k) participants who were younger and had lower account balances were more likely to use TDFs and to continue to use them. Those more likely to stop investing in TDFs were older, had longer tenure, or had higher account balances, although these participants overall stayed with TDFs at a high rate.

The press release is online here.

The full report is online here.

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President and CEO, EBRI

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