Every year, each 401(k) Plan Administrator is required by law to disclose summary financial information of 401(k) plan to plan participants. I was reading the Microsoft 2006 Summary Annual Report today and some numbers are quite revealing.

Here is the original text from the report:

"Benefits under the plan are provided by Fidelity Management Trust Company. Plan expenses were $174,588,997. These expenses included $0 in administrative expenses and $174,588,997 in benefits paid to participants and beneficiaries, and $0 in other expenses. A total of 58,263 persons were participants in or beneficiaries of the plan at the end of the plan year, although not all of these persons had yet earned the right to receive benefits.

The value of plan assets, after subtracting liabilities of the plan, was $4,430,511,055 as of December 31, 2006, compared to $3,522,951,171 as of January 1, 2006. During the plan year the plan experienced an increase in its net assets of $907,557,884. The increase includes unrealized appreciation of depreciation in the value of plan assets; that is, the difference between the value of the plan's assets at the end of the year and the value of the assets at the beginning of the year or the cost of assets acquired during the year. The plan has a total income of $1,071,286,136 including employer contributions of $128,814,606, participant contributions of $428,090,550, realized gains of $0 from the sale of assets, earnings from investments of $213,077,272, and unrealized appreciation of $301,303,708."

If the above numbers are boring, below are some interesting revelations from quick calculation:

1) The average account balance by the end of the year is $4.43B / 58,263 = $76,043, which is much smaller than the nation's average 401(k) account balance of $102,014 from a published 2006 study. This probably reflects the relative young age and short tenure of Microsoft employees.

2) Given that Microsoft approximately have 48,000 domestic employees (source: Microsoft 2007 Annual Report), the average employee contribution per employee in 2006 is $428M / 48,000 = ~$8,900, compared to the 2006 401(k) contribution limit of $15,000 (plus catch-up limit of $5,000 for employee over 50 years old).

3) The average employer contribution per employee is $129M / 48,000 = $2,684. Microsoft's 401(k) plan provides company match of 50 cents per one dollar contribution, up to the 6% of employee's annual base salary. If fully matched, $2,684 suggests an average base salary of approximately $90,000. My gut feeling is $90k is in the close neighborhood of Microsoft's average base salary, so it appears that an average Microsoftie is saving enough to get the full company match. (A less likely but still possible alternative conclusion is high income employees contributed disproportionately to the plan and lifted the average figure.)

4) Average portfolio return of the year is approximately (213M + $301M) / (($3.52B + $4.43B) / 2) = 12.9%. Not too bad on an absolute sense but certainly not stellar compared to the S&P 500 return of over 15% in 2006 and my 401(k) portfolio's annual return of 18.7% in the same year. But it can also be that my portfolio is too aggressive though.

Can you draw additional conclusion from the report? Please share in the comments.