Participants closed off Q2 with higher 401(k) contribution balances and steady contribution rates, finds new data from the Bank of America.
The average account balance in March was $93,054, up 8% compared to year-end 2023 at $86,000, while contributions increased 20% over the last two quarters, from $1,565 in Q2 2024 compared to $1,312 in Q4 2023.
The average contribution rate held at 6.5%, consistent with the end of 2023, as more participants (86.7%) kept their contribution rate at a stable pace compared to Q1 (81.2%), Bank of America reported.
Regarding loans and hardship withdrawals, 2.7% of participants admitted to borrowing from their workplace plan in Q2, with the average loan per participant coming in at $9,311. This totaled to 11.9% of participants who currently hold at least one loan, although still down from 12.3% at the end of Q1. Gen X, sandwiched between careers and caregiving responsibilities, had most outstanding loans (24%) compared to any other generation.
Participants taking hardship withdrawals ticked up in recent months, from 0.61% at the end of the first quarter to 0.67% in Q2. The average participant hardship amount in Q2 came in at $5,067, compared to $5,030 in Q1.
Future growth for HSAs
Bank of America’s data spotlights the increase in account balances among health savings accounts (HSAs). Participants enrolled in the savings tool had an average account balance of $4,930 in Q2, compared to $4,380 at year-end 2023, and 37% said they contributed more than they withdrew year-to-date.
Account holders were likelier to spend their contributions on health care expenses (73%), compared to saving their contributions for retirement (27%). On average, Gen X employees contributed the most to their HSAs at $1,117, while Millennials tended to save the most (36%).
The number of account holders investing for future growth also grew slightly, at 14% compared to 12% in Q4 2023.
“While nearly 4 in 10 participants contributed more than they withdrew from their health savings account, more participants could benefit by taking advantage of the investment feature to grow long-term health care savings,” stated Bank of America in its 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.