Fidelity Investments reported Wednesday that the average 401(k) account balance held with it hit a 10-year high of $71,500 at the end of 2010.
For participants who continuously contributed to their 401(k) the average balance increased to $183,100 from $59,100 a decade ago. The average contribution rate remained at 8.2% for the eighth straight quarter.
"While 401(k)s have been in existence for more than 30 years and are now the most widely held workplace retirement account by today’s American workforce, many misconceptions exist about them," says James M. MacDonald, president of workplace investing at Fidelity.
"Despite the myths out there, this savings vehicle is, in fact, helping millions of Americans of all income levels save for their future," MacDonald adds.
In addition, the data dispelled some myths surrounding 401(k)s, starting with the belief that most Americans do not contribute to the plan.
On the contrary, Fidelity found, among those earning $20,000 to $40,000 a year, 53% contribute to their 401(k), and among those earning $40,000 to $60,000, 71% contribute.
And while it is widely believed that most participants are not engaged in their plans, three out of four participants contacted Fidelity by phone or over the Internet in 2010.
As for companies eliminating their match, only 8% of Fidelity plan sponsors either eliminated or reduced their employer contributions in 2008 and 2009. Since then, 55% have indicated they plan to reinstate the match within the next 12 months.
Fidelity research also revealed that most of its participants have not taken out a loan or cashed out of their 401(k). And finally, Fidelity reported that it is a myth that Roth 401(k)s are only for older, wealthy employees.
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