BofA Report Finds Average 401(k) Balances Up Nearly 10% in 2023; More Participants Taking Hardship Withdrawals

August 8, 2023 at 8:00 AM Eastern

CHARLOTTE, NC – Today, Bank of America released its second quarter 2023 Participant Pulse (PDF) (MAP5773977), which found average 401(k) balances increased by $7,250 (9.6%) since the end of 2022.1  The report also found that a growing number of 401(k) participants are initiating withdrawals from their plans. The number of participants taking hardship distributions increased 36% year-over-year,1 following increases in first quarter2 this year. In addition, the percent of participants borrowing from their workplace plan in second quarter also increased (2.5%, up from 1.9% in first quarter).1

The Pulse monitors plan participants’ behavior in Bank of America recordkeeping clients’ employee benefits programs, which is comprised of more than 4 million participants as of June 30, 2023.

“The data from our report tells two stories – one of balance growth, optimism from younger employees and maintaining contributions, contrasted with a trend of increased plan withdrawals,” said Lorna Sabbia, Head of Retirement and Personal Wealth Solutions at Bank of America. “This year, more employees are understandably prioritizing short-term expenses over long-term saving. However, it’s critical that employees continue to invest in life’s biggest expense – retirement.”

Amid rising 401(k) plan withdrawals, employee contributions remained steady, with the average rate remaining at 6.5% throughout the first half of 2023.1 Meanwhile, more participants increased their rate than decreased their rate (10.2% versus 2.2%) in second quarter1 which was led by Gen Z3 and Millennial3 employees (19.3% versus 2.6% and 11%  versus 2.6%, respectively).

Health Saving Account and Financial Wellness Trends

To provide a more holistic look at confidence around financial preparedness, Bank of America has expanded the quarterly Participant Pulse report series to examine engagement across Health Saving Accounts (HSA)4 and overall feelings of financial wellness, in addition to 401(k) trends. Key HSA and financial wellness findings include:

  • HSA account balances increased by 11.9% over year-end 2022. Average HSA account balances increased from $3,931 to $4,397 in the first six months of 2023.4
  • Many HSA account holders continue to save their contributions for future expenses. Nearly 4 in 10 account holders contributed more than they withdrew in second quarter, consistent with year-end 2022.4
  • Baby Boomers invested their HSAs at higher rates than other generations. On average, only 12% of account holders invested their HSAs for future growth in second quarter, with Baby Boomers3 leading at 15%. In addition, more men invested than women (18% versus 11%).4
  • Feelings of financial wellness declined slightly. Out of a possible 100 points, the average financial wellness score for employees was 56, down one point from 57 at year-end, with women trailing men (52 versus 59).1

Read the full report and methodology (PDF) to learn more.

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 68 million consumer and small business clients with approximately 3,900 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).

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.

© 2023 Bank of America Corporation. All rights reserved. MAP5840166

Reporters may contact:

Don Vecchiarello, Bank of America
Phone: 1.980.387.4899
don.vecchiarello@bofa.com

Footnotes

1 Comparisons to 2022 reference data derived from Bank of America Retirement and Benefit Plan Services 401(k) and HSA data platforms as of 3/31/22 or 12/31/2022.

2 Bank of America, “401(k) Participant Pulse,” March 2023.

3 Generation defined by the following birth years: Baby Boomers 1946 – 1964; Gen X 1965 – 1980; Millennials 1981 – 2000, GenZ after 2000.

4 Reference data derived from Bank of America Retirement and Benefit Plan Services HSA data platform as of 6/30/2023

Categories

What would you like the power to do?