Employee and employer contributions to 401(k) plans edged slightly higher in the second quarter, according to Fidelity Investments’ analysis of its 11.9 million 401(k) accounts.
Employees contributed an average of $1,660 to their accounts during the second quarter, while employers kicked in an average of $950. That’s an increase of $30 for both employees and employees from the year-ago quarter. From the second quarter of 2009, the increase is more impressive: employees contributed $150 more, while employers threw in another $90.
“Rising contribution levels from both employees and employers show a strong commitment that both have to workplace savings plans,” James M. MacDonald, president of Workplace Investing at Fidelity Investments, said in a statement.
The Fidelity analysis also showed an uptick in the number of employers offering Roth 401(k) savings plans—35% of employers, up from 10% five years ago. The adoption of the savings option also increased among Fidelity 401(k) participants. More than half (55%) are in plans that offer a Roth 401(k), up from 15% five years ago.
Fidelity found target-date funds and Roth 401(k) plans to be more popular among Gen Y participants than other age groups. Among plans that offer target-date funds as investment options, half (51%) of Gen Y participants had 100% of their assets in target-date funds. In contrast, the participation rate in such funds across all ages is 30%, according to the analysis.
Gen Y participants were also more likely to go for the Roth 401(k) savings option with 8.8% contributing to them versus 5.8% among all active participants.
The findings are consistent with a recent report from the Investment Company Institute that showed that the vast majority of defined contribution plan participants continued to sock away money for their retirement in the first quarter of the year.
Margarida Correia is an associate editor with Bank Investment Consultant, a SourceMedia publication.
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