Although the average balance for Fidelity 401(k) plans dropped slightly at the end of the second quarter, employee and employer contributions were both higher than they have been during the second quarters of recent years, Fidelity announced today.
Of particular importance is that Fidelity's 2.2 million Gen Y participants, those born between 1979 and 1991, are adopting target date funds and Roth 401(k) plans more than other age groups, Fidelity says.
The average employee contribution rose to $1,600 during the second quarter of 2012, up $30 from the same period last year and up $150 from the second quarter of 2009. The figures are based on the 11.9 million 401(k) accounts handled by Fidelity, the nation's largest 401(k) provider.
The average contribution from employers rose to $950 during the second quarter of this year, up $30 from the same period last year and up $90 from the same period in 2009. The average 401(k) balance in this year's second quarter dropped by 2.5% to $72,800 from the end of the first quarter.
In those 401(k) plans that offer target-date funds, half of Fidelity's Gen Y participants have 100% of their contributions in such funds.
In addition, the number of employers offering a Roth 401(k) plan rose to 35% from 10% five years ago. In plans that offer them, they are used by Gen Y participants more than any other demographic group: 8.8 % of Gen Yers contribute to them while only 5.8% of all participants do.
"Rising contribution levels from both employees and employers show a strong commitment that both have to workplace savings plans," says James M. MacDonald, president of workplace investing for Fidelity Investments.
"Trends we are seeing among our more than 2 million Gen Y participants are particularly exciting," he adds. "They are starting off with better diversified portfolios than previous generations, which can have a positive impact over the long term."
--Karen DeMasters