401(k) Account Balances Increase 15%: Bank of America

During 2023, balances in 401(k) retirement accounts increased by 15% and Health Savings Accounts (HSAs) rose by 11%, according to a Bank of America report.

The Participant Pulse report for Q4 2023 found that the average 401(k) account balance increased from $75,045 at the end of 2022 to $86,280 a year later.

The rise in account balances was due to a combination of participants contributing larger amounts to their plans and increases in the value of investments, according to the bank.

Nearly 18% of 401(k) plan participants increased their contribution rates in Q4, an increase from just over 9% who increased their contributions in Q3.

Fewer participants borrowed from their 401(k) plan, with the percentage of consumers that withdrew money decreasing from 2.5% in Q3 to 2.3% in Q4.

Of those that did borrow, the average loan per participant declined from $8,530 to $8,210.

Lorna, Sabbia, head of retirement and personal wealth solutions at Bank of America, said: “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 also examined consumer engagement across HSAs.

Bank of America revealed the average account balance rose from $3,930 in 2022 to $4,380 in 2023, which represented an 11% increase year-over-year.

Overall, 76% of HSA contributions were spent on health care expenses, while 24% were saved. Whereas millennials saved 34% of their contributions, which was more than any other generation.

Men were also more likely to invest their contributions for future growth as 17% of men invested their HSA contributions, compared to only 11% of women.