Markets take toll on 401(k) balances in 4Q of '15

By Shelby Livingston, Crain News Service

BOSTON (Feb. 5, 2016) — Market volatility weighed on retirement plan funds as the average 401(k) balance of accounts administered by Fidelity Investments dropped 3.7 percent in the fourth quarter of 2015 compared with the same period the year before, the financial services firm said Feb. 4.

In an analysis, Boston-based Fidelity/FMR L.L.C. reported that the average 401(k) balance shrank to $87,900 in the fourth quarter from $91,300 in the prior-year period. However, the average 401(k) balance rose 4.1 percent from the third quarter of 2015 after the market recovered slightly from losses due to volatility.

Fidelity administers about 13.5 million 401(k) accounts across 21,600 plans, according to a Fidelity spokesman.

Market volatility in August 2015 affected 401(k) balances, but a market recovery in December “wasn't quite enough to make up all the ground that was lost,” the spokesman explained.

Still, the impact from the market was offset by increases in employer and employee contributions to the retirement funds, according to the analysis.

The average total 401(k) contribution, which includes employer and employee contributions, was $2,540 in the fourth quarter, up 4.1 percent year-over-year, Fidelity said in the analysis.

Employers contributed an average of $3,610 to 401(k) accounts for all of 2015, Fidelity said.

This report appeared on the website of Crain's Business Insurance magazine, a Chicago-based sister publication of Tire Business.