BOSTON (AP) — Employee 401(k) accounts grew nearly 8 percent last quarter as a surging stock market boosted investment returns and worker contributions increased.
Fidelity Investments, the nation’s largest 401(k) administrator, said on Tuesday that the average balance among its nearly 12 million accountholders was $74,600 at the end of March. That’s up from $69,100 at the end of 2011.
Fidelity attributed about 80 percent of the increase to investment performance. Stocks rallied nearly 13 percent, the market’s best first-quarter performance since 1998. A broad bond market index rose just 0.3 percent.
The rest of the average 401(k) balance increase was the result of increased savings by workers as well as matching contributions from their employers.
Fidelity’s 401(k) participants set aside an average $5,810 through paycheck deductions for the 12-month period ended March 31, and employers kicked an additional $3,360. Both numbers are slightly higher than they were a year ago.
The average employee contribution has remained steady at around 8 percent of annual pay for the past three years, says Beth McHugh, vice president of market insights at Boston-based Fidelity.
But saving rates are beginning to tick upward. Nearly 10 percent of Fidelity 401(k) participants increased their contribution rate in the first quarter, while roughly 4 percent decreased it.
Investment earnings and contributions can grow tax-free in an employer-sponsored 401(k) account, which is a key reason why they’re a popular way to save for retirement.