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401(k) Balances Growing Again: Fidelity

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401(k) retirement plans showed significant rebounds in 2009, recouping much of their losses from 2008, a new study by Fidelity Investments finds.

Average 401(k) account balances ended the year at $64,200, up 5.7% from the end of the third quarter and up 28% for the year, according to Fidelity, Boston. During the same year, Standard & Poor’s 500 index showed a total return of 26%, Fidelity notes.

The average deferral rate remained relatively flat for the year at about 8.2%, but the fourth quarter saw the continuation of a trend of more participants electing to increase their deferral rates than to decrease them, Fidelity says.

The company’s analysis of employed participants who had a Fidelity 401(k) account from 1999 to 2009 showed their account balance increased nearly 150% in the period, to $163,900 at the end of 2009 from $65,800 at the end of 1999.

The increase in balance was due to continued participant and employer contributions, dollar cost averaging and market returns, Fidelity says. These continuous participants had a median age of 51 years with a deferral rate of 10.4%, the analysis found.

In 2000, Fidelity found participants on average directed over 80% of their new contribution dollars into equities. By contrast, participants were contributing less than 70% to equities by the end of 2009. At the same time, the proportion of participants contributing 100% to equities dropped to 19% in 2009 from 47% percent in 2000.