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

Feb. 14 (Bloomberg) -- 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