401(k) Contributions Tick Up Slightly in Q1 2026
Participant contributions inched up in the first quarter of 2026, finds a new Participant Pulse report from the Bank of America.
The average contribution rate is now 7.3%, with nearly half of Baby Boomers adding over 7% to their 401(k) account as of March.
The findings show some behavioral changes among consumers. Not only did contributions grow marginally, but the percentage of participants borrowing from their retirement plans in Q1 dropped from 2.3% to 1.9%.
While fewer participants took savings from their accounts, average loan amounts increased, up to $10,400 in Q1 from $9,300 the prior quarter. The percentage of participants with a loan in default also grew faintly to 10.5%, an increase from 10.4% in Q4.
Other factors stayed consistent to Q4 2025 findings—such as the number of participants taking a hardship distribution (0.77%), the average contribution amount ($2,150), the average participant hardship amount ($5,270), and the average account balance ($112,070).
Further, 6.7% of all participants taking a distribution in Q1 did so as a hardship distribution, compared to 7.4% in Q4.
Despite the increase in contributions so far in 2026, just 5% of participants contributed the maximum amount allowed to their retirement plan in 2025, including those who made eligible catch-up contributions. This was likely fueled by increases in day-to-day costs and inflation, driven by President Donald Trump’s tariffs earlier in the year.
HSA holders contribute more, withdraw less
In another sign of consumer optimism, Bank of America’s report finds that 35% of health savings account (HSA) holders contributed more than they withdrew year-to-date.
Sixty-one percent of contributions were spent on healthcare expenses, down from 72% last quarter. This rest of contributions, at 39%, were saved for future expenditures.
On average, Generation X employees contributed the most to their accounts, at $646, while Millennial workers saved the most of their contributions, at 48%.
A smaller number of accountholders invested savings for potential future growth, consistent with 2025 investing behavior. When organized by gender, the findings report that 20% of men surveyed invested HSA contributions for future growth, compared to 13% of women. By generation, Boomers were the likeliest to use the HSA investment feature.
Bank of America’s report monitored the participant behavior of over four million participants with positive account balances as of March 31, 2026.
SEE ALSO –
Plans with Automatic Features Boast Stronger Account Balances
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news.