Fidelity 401(k) plans fall 12 percent in 3Q

Workers continued to stash more money in their 401(k) plans in the third quarter, but the stock market's sharp third quarter decline only left them further behind in reaching their savings goals.

The average balance in Fidelity Investments' plans dropped nearly 12 percent, falling to $64,300 by the end of September from $72,700 three months earlier, the company said Wednesday.

That setback snapped four consecutive quarters of increases, and even put investors behind where they stood a year ago. Their balances were down 2 percent compared with September of last year, according to Fidelity, the largest workplace savings plan provider, with 11.7 million participants.

Part of the blame is a 14 percent decline in the Standard & Poor's 500 index in the third quarter. Investors worried about the European debt crisis and slow economic growth at home, leading to the stock market's worst quarterly loss since the financial crisis in late 2008.

Workers' 401(k)s are typically invested in bonds along with stocks to help reduce volatility. Third-quarter investment gains for bonds helped offset some of the stock market's decline, preventing deeper damage to account balances.

The damage also was eased because workers set aside more from their paychecks to stash in 401(k)s, while employers increased matching contributions.

Fidelity said 84 percent of plan participants contributed over the past 12 months, the highest level in more than two years. Their average contribution was $5,890, setting a record, and up $200 from the same period a year earlier. Employers contributed an average $3,320, an increase of $220.