401(k) Balances Reached Record on 2012 Stock Market Rally

Photographer: Spencer Platt/Getty Images

Traders work on the floor of the New York Stock Exchange in this file photo. Close

Traders work on the floor of the New York Stock Exchange in this file photo.

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Photographer: Spencer Platt/Getty Images

Traders work on the floor of the New York Stock Exchange in this file photo.

Fidelity Investments, the largest provider of 401(k) retirement savings plans, said average balances in the employer-sponsored accounts reached a record high in 2012 as market gains boosted assets.

The average balance in the U.S. rose 12 percent from a year earlier to $77,300 as of Dec. 31, according to a report today by the Boston-based mutual-fund firm. Fidelity administers plans for about 12 million workers and has been tracking the data since 2000.

About two-thirds of the average-balance increase came from market appreciation. The rest was from contributions to the accounts, said Beth McHugh, vice president of market insights at Fidelity. The Standard & Poor’s 500 Index, a benchmark for large U.S. stocks, gained 13 percent last year.

“People are still contributing,” McHugh said in an interview. “Obviously the market is helping them along the way.”

The year-end average was 58 percent higher than in 2008, when the global financial crisis shook equity markets. That year the average balance plummeted to $48,900 as the S&P 500 Index declined 38 percent.

Balances have since rebounded in three of the past four years. The previous record high was $75,900 at the end of 2012’s third quarter.

A 401(k) generally lets employees contribute a portion of their wages to the account on a pretax basis. Worker contributions are limited to $17,500 in 2013. Those age 50 or older may set aside an additional $5,500, according to the Internal Revenue Service.

Americans held $3.5 trillion in 401(k) accounts as of Sept. 30, according to the Investment Company Institute. The ICI is the Washington-based trade group for the mutual-fund industry.

To contact the reporter on this story: Margaret Collins in New York at mcollins45@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

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