Average balances of 401(k) retirement plans were about 62percent higher as of March 31 than the first quarter of 2009, whenthe stock market reached a 12-year low, according to FidelityInvestments.

The average account balance in the U.S. was $74,600 comparedwith $46,200 at the end of the first quarter of 2009, according toa report released today by the Boston-based mutual-fund manager.The Standard & Poor's 500 Index fell about 40 percent in the 12months ended March 31, 2009.

The stock market recovery and renewed commitment to saving hasdriven the increase, Beth McHugh, vice president of market insightsfor Fidelity, said in an interview yesterday.

“We're seeing the benefits of strong markets,” said McHugh. “Wesaw the account balance growth more attributable to the market thancontributions.”

Stock market performance accounted for about 80 percent of theaverage $5,500 increase in the first quarter of 2012 compared withthe prior quarter, while the remaining 20 percent was from employerand worker contributions, Fidelity said. The S&P 500 rose about12 percent in the first three months of this year.

The growth in the accounts comes as Americans continue to saythey're worried about outliving their savings and Congress weighslimiting contributions or reducing the tax advantages of theplans.

Workers' confidence in their ability to retire remainshistorically low, with about 14 percent saying they were verycertain they'd have enough to live on comfortably, according to theEmployee Benefit Research Institute, a Washington-based nonprofitthat studies employee benefits, in a March survey. That compareswith a high of 27 percent in 2007.

Capping Contributions

The U.S. House Ways and Means Committee held a hearing in Aprilon retirement savings as Congress seeks to overhaul the nation'stax code and reduce the deficit. Proposals to alter the benefitshave included reducing the amount that can be contributed orreplacing deductions for savings with credits. Tax incentives forretirement accounts cost the government more than $130 billion inrevenue this year, according to the Joint Committee onTaxation.

A 401(k) plan generally lets employees defer a portion of theirwages to the account on a pretax basis. Contributions are limitedto $17,000 for 2012 and those age 50 or older may set aside anadditional $5,500, according to the Internal Revenue Service.

Legislators and regulators from the Departments of Labor toTreasury have been looking at Americans' retirement securitybecause life expectancies are increasing and savings have shiftedfrom traditional pension plans, where employers generally providedretired employees with lifetime payments, to 401(k) accounts thatindividuals largely are responsible for funding.

About 60 percent of U.S. workers said they have less than$25,000 in savings and investments, according to the EBRIsurvey.

Fidelity, the largest provider of 401(k)s, has almost 12 millionparticipants in about 20,000 employer-sponsored definedcontribution plans. The mutual-fund manager changed its averagebalance calculation last year to include 401(k) accounts that aresold through advisers as well as directly through the company,McHugh said. Using the prior methodology, average account balanceswere $74,900 at the end of the first quarter last year, Fidelitydata show.

About 10 percent of workers increased their savings rate duringthe first quarter of this year, compared with 4 percent whodecreased it, according to the report. The correspondingpercentages in the three months ended March 31, 2009, were 5.7percent who increased their savings rate and 6.4 percent whodecreased it, McHugh said.

“Even with the market and its unpredictability we're notnecessarily seeing people shy away from contributing,” said McHugh,who is based in Covington, Kentucky. Participants saved 8 percenton average of their salaries, which was unchanged from last year,she said.

The majority of plans administered by Fidelity offer workers theability to automatically increase their savings rate each year,usually by 1 percent, said McHugh.

Americans held $3.1 trillion in 401(k)s as of Dec. 31, accordingto the Washington-based Investment Company Institute, a trade groupfor the mutual-fund industry.

The Fidelity data on average balances looks at single accountsand doesn't include additional savings workers may have inindividual retirement accounts or multiple 401(k)s, said McHugh.The median account balance at the end of the first quarter was$23,000, Fidelity said.

In 2011 the median balance of accounts administered by VanguardGroup Inc. was $25,550 and the average was $78,276, according toLinda Wolohan, a spokeswoman for the mutual-fund manager based inValley Forge, Pennsylvania.

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