The average account balance in the 401(k) accounts of Fidelity Investments clients fell 7.6% in the second quarter, but still was 15% higher than on June 30, 2009.
The account-balance drop “was due to the decline in the market,” said Beth McHugh, vice president of market insights, in an interview. The average account balance was $61,800 on June 30 compared with an average of $66,900 on March 31 she said. The average balance as of June 30, 2009, was $53,900.
The Dow Jones industrial average dropped to 9,774 on June 30 from 10,857 on March 31, a decline of 9.9%.
The average deferral rate was 8.2% for the quarter ended June 30, a rate that has been steady for several quarters, Ms. McHugh said. A Fidelity news release said 32% of participants had been deferring at rates of 10% or more, and a higher percentage of participants increased their deferrals than decreased them — 5.3% vs. 2.9%.
Eleven percent of total active participants took out loans from 401(k) plans in the year ended June 30, up from 9% for the 12 months ended June 30, 2009. In addition, 21.9% of participants had loans outstanding as of June 30, compared with 19.9% a year earlier, the news release said.
“The current economy has forced some workers to borrow from their 401(k) accounts in order to pay for critical living expenses, ultimately jeopardizing their future retirement,” James M. MacDonald, president of workplace investing for Fidelity, said in the news release.
During the second quarter of 2010, Fidelity said 2.2% of active participants took a hardship withdrawal vs. 2% for the year-ago period.
Fidelity's analysis was based on records of 11 million participants in 17,000 401(k) plans for which Fidelity was a record keeper as of June 30, the news release said.
