Percentage of Plan Participants Who Increased Their 401(k) Contribution Rate Doubled in Q4

CHARLOTTE, N.C., Feb. 7, 2024 /PRNewswire/ -- Today, Bank of America Retirement and Personal Wealth Solutions, in partnership with Bank of America Institute, released its fourth quarter 2023 Participant Pulse (MAP6212241), which found that average 401(k) account balances rose 15% to $86,280 in 2023, increasing from $75,045 at the end of 2022, due to a combination of participants contributing higher amounts to their plans, and increases in the value of investments.1 Nearly 18% of 401(k) plan participants increased their contribution rates last quarter, up from just over 9% who did so in the third quarter.2 In addition, year-end 2023 Health Savings Account balances increased 11% over the prior year.3

(PRNewsfoto/Bank of America Corporation)

The Pulse monitors the behavior of plan participants in Bank of America recordkeeping clients' employee benefits programs, which are comprised of more than 4 million participants as of December 31, 2023.

"We were encouraged to see more plan participants taking positive actions in their accounts in the fourth quarter," said Lorna Sabbia, Head of Retirement and Personal Wealth Solutions at Bank of America. "These insights offer signs that people are prioritizing their retirement savings, with more employees increasing their contribution rates and fewer taking hardship distributions."

The report found that fewer participants borrowed from their 401(k) plan (2.3%, down from 2.5% in the third quarter), and the average loan per participant declined to $8,210 (down from $8,530).2

Health Saving Account Trends
In addition to 401(k) trends, the Participant Pulse examines engagement across Health Saving Accounts (HSA) and overall feelings of financial wellness. Key findings include:

  • Average HSA account balance increased by 11% YoY. Average account balances increased to $4,380 in 2023, up from $3,930 at year-end 2022, with nearly 4-in-10 accountholders contributing more than they withdrew.3
  • Millennials saved more of their HSAs. Overall, 76% of HSA contributions were spent on health care expenses, while 24% were saved. Millennials4 saved 34% of their contributions, more than any other generation.3
  • More men than women invested their HSA contributions. 12% of account holders invested their HSA contributions for future growth, with men outpacing women (17% vs. 11%).3

Read the full report and methodology here to learn more.

1Comparisons to 2022 reference data derived from Bank of America Retirement and Benefit Plan Services 401(k) data platform as of 12/31/2022.
2Comparisons to 2023 Q3 reference data derived from Bank of America Retirement and Benefit Plan Services 401(k) data platform as of 9/30/2023.
3Reference data derived from Bank of America Retirement and Benefit Plan Services HSA data platform as of 12/31/2023.
4Generation defined by the following birth years: Baby Boomers 1946 – 1964; Gen X 1965 – 1980; Millennials 1981 – 2000, GenZ after 2000.

About Bank of America Institute
Bank of America Institute is dedicated to uncovering powerful insights that move business and society forward. Established in 2022, the Institute is a think tank that draws on data and analyses from across the bank and the world to provide timely and original perspectives on the economy, sustainability, and global transformation. The Institute leverages the depth and breadth of the bank's proprietary data, from 69 million consumer and small business clients, 57 million verified digital users, $4.1T in total payments in 2023 and $1.27T in consumer and wealth management deposits. From this robust data set, the Institute provides a unique perspective on the health of the economy. It also elevates thought leadership from throughout the bank that addresses long-term trends and shares these findings with the general public.

Bank of America
Bank of America is one of the world's leading financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 69 million consumer and small business clients with approximately 3,800 retail financial centers, approximately 15,000 ATMs (automated teller machines) and award-winning digital banking with approximately 57 million verified digital users. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 4 million small business households through a suite of innovative, easy-to-use online products and services. The company serves clients through operations across the United States, its territories and more than 35 countries. Bank of America Corporation stock is listed on the New York Stock Exchange (NYSE: BAC).

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Bank of America is a marketing name for the Retirement Services business of Bank of America Corporation ("BofA Corp."). Banking activities may be performed by wholly owned banking affiliates of BofA Corp., including Bank of America, N.A., Member FDIC. Brokerage and Investment advisory services are provided by wholly owned non-bank affiliates of BofA Corp., including MLPF&S, a dually registered broker-dealer and investment adviser and Member SIPC.

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