401(k) Plans see significant first-quarter increases as investors, buoyed by stock-market gains, step up contributions, Fidelity says
If you took advantage of your company’s 401(k) plan during the first three months of this year, you may have experienced a big percentage increase in its performance since the first quarter of 2009.
According to Fidelity Investments, the average 401(k) balance rose to $74,600 at the end of the first quarter, a 62 percent gain since the same period three years ago – often considered the low of the 2008-2009 market downturn, when the average balance was $46,200, the Boston-based investment company said. Compared with the fourth quarter of last year, balances rose 8 percent.
The increase was mainly the result of strong stock market performance. Participants also stepped up their own contributions, and took advantage of employer benefits, Fidelity said.
Interestingly, the rise in individual contributions was bolstered by a program known as AIP, or Annual Increase Programs. Under this program, employees can opt to have their contribution rates automatically increase, usually by about 1 percent per year. About 76 percent of the 401(k) plans managed by Fidelity offer an AIP. Of those participants in plans with this option, 16 percent increased their contribution rate.
The data released by Fidelity is based on an analysis of more than 20,000 plans and almost 12 million records of participants as of March 31, including information from the Fidelity Advisor 401(k) program.
The author is solely responsible for the content.