BOSTON (TheStreet) -- The quarterly Bank of America Merrill Lynch (BAC) - Get Bank of America Corp Report, 401(k) Contribution Activities Scorecard released this week shows postrecession savings habits are on the upswing, but so are in-service and hardship withdrawals.

The Q3 report, based on the activities of approximately 1.4 million actively contributing participants, found that among those who have taken some type of savings action this year, 67% took a positive action (started or increased saving) versus 33% who took a negative action (stopped or decreased saving) -- compared with 60% who took a positive action and 40% who took a negative action during the same nine-month period last year.

Year-to-date, 331,153 employees have taken a positive savings action in their 401(k) plan accounts, compared with 318,884 during the same period last year.

Other positive year-over-year trends revealed among retirement plan sponsors include a 17% increase in the use of automatic increase and an 8% increase in the use of automatic enrollment.

Kevin Crain, head of institutional client relationships for Bank of America Merrill Lynch, credits employers for nudging workers into increased 401(k) participation.

"I see the work they are still doing to make sure easy decision programs like auto enroll and auto increase are in there along with an advice program," he says. "They are offering things to participants to make it easier for them to engage. Beyond that, I think participants attitudes are also more focused on savings and doing more."

Crain points to a "big spike" in positive actions during the final quarter of 2009 as a hopeful indicator of how this year will conclude.

He credits much of that jump to an ongoing, four-year-old effort to tie retirement decisions to open enrollment periods and the end-of-the-year deadline for changes to health insurance. Bank of America Merrill Lynch launched the program, primarily with large retail firms reluctant to offer auto enrollment or deferral increases.

"In our book of business, over four years, nearly 600,000 people enrolled in 401(k) plans who were not enrolled before because of this," Crain says. "Those are incredible numbers for us."

Tempering the positive news was an uptick in the volumes and dollar amounts being distributed from 401(k) plan participant accounts through loans, as well as hardship and in-service withdrawals.

Year to date, through Q3, hardship withdrawal transactions (25,500) and total amount distributed ($111.7 million) were up 4.6% and 2.6% respectively over the same period last year. Both numbers represent record highs for the first three quarters of a year since 2007, the earliest year data were reviewed for this report.

In-service withdrawal transactions (87,000) and total amount distributed ($1.04 billion) were also up 8.3% and 3.7% respectively over the same period last year.

Year to date, new loan issuance transactions (105,000) and total amount borrowed ($822.1 million) were up 3% and 13.2% respectively over the same period last year.

Analysis of past four years shows in-plan distribution volumes peaking in the third quarter. For hardship withdrawals in particular, the increase tends to be seen in requests to pay college tuition expenses.

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-- Written by Joe Mont in Boston.

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