401(k) participants finished Q1 with higher retirement account balances, as contribution rates slightly increased, finds new data released today by Bank of America.
The BoFA Q1 2024 Participant Pulse survey, which shares insights on the correlations between short-term economic trends and retirement planning, found that the average account balance at the end of May was approximately $92,000, up 17% compared to $79,000 at the same time in 2023.
The uptick in account balances could be linked to the fact that participants have contributed slightly more to their retirement accounts in 2024. The average contribution rate in Q1 was 6.6%, up marginally from 6.5% at year-end 2023. In fact, BoFA reports that one in five 401(k) participants changed their contribution rate in Q1, with 15% increasing their rate while just 3.5% decreasing it.
As a result, the average contribution rate in Q1 was $1,904—up almost half (45%) from Q4 in 2023—but comparable to the same time last year ($1,893).
Average account balances also grew among health savings accounts (HSAs), with an average balance of $4,868, an increase from $4,380 during year-end 2023. Sixty-one percent of participants used their contributions towards health care expenses, while 39% saved. Millennials saved the most out of all generations, at 47% of their contributions.
On the loan side, while fewer participants took money out of their 401(k), those who did tended to withdraw more. The data shows that 2% of 401(k) participants borrowed from their plans in Q1, down slightly from 2.3% in Q4 2023. Similarly, of those with a loan, 12.3% report having at least one loan, down from 12.6% in Q4 2023 and 14.3% in Q1 2023.
However, the average loan per participant during the quarter was $9,100, up from $8,600 a year ago.
Lastly, BoFA analyzes trends within hardship distributions, finding that the number of participants who take such a distribution has risen lightly compared to last year. According to the data, 0.61% of participants took a hardship distribution in Q1, compared to 0.57% in Q4 of last year and 0.46% in Q1 2023. The average participant hardship amount was $5,030, up from $4,366 in Q4 2023.
Additional findings from BoFA’s 2024 Participant Pulse survey can be found here.
SEE ALSO:
- New Portfolios from Merrill Designed to Provide BofA Clients Predictable Retirement Income
- 401(k) Account, HSA Balances Up for 2023
- Short-Term Financial Needs Infringing on Retirement Saving: BofA Report
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.