Plan Sponsor Asks…

Q: Are target date funds popular with younger 401(k) plan participants?

A: Analysis by the Employee Benefit Research Institute (EBRI) indicates that target date funds are increasingly attractive to those in their 20s and 30s. In fact, at the end of 2010, more than one-third (35%) of the account balances of recently hired participants in their 20s were invested in target date funds.

EBRI found that in 2006, the percentage of recently hired 401(k) participants (defined as two or fewer years of service) investing in target date funds was 28%. That grew to 44% in 2008 and to 47% in 2009. At the end of 2010, the number was almost 48%.