By Mark Jewell, AP Personal Finance Writer

BOSTON (AP) — Workers are again embracing 401(k) plans after the market meltdown and ongoing recession left many unable or unwilling to set aside some of their paychecks for retirement, according to the nation's largest workplace savings plan provider.

In the second quarter, more participants in Fidelity Investments' defined contribution plans raised the amount they set aside rather than decreased the percentage of pay they put into their savings. In a study to be released Wednesday, the Boston-based company said it's the first time that's happened in a year.

In each of the previous three quarters, the percentage of Fidelity's 11.2 million plan participants cutting their contributions topped 6 percent, exceeding the number who increased the amount going into their 401(k)s. But in the three months ended June 30, 4.7 percent boosted their contributions, with just 3 percent decreasing it. The vast majority left their rates untouched in all those periods.

Investors who managed to sock away more have been rewarded, with the Standard & Poor's stock index rising more than 15 percent in the second quarter. Those who responded to last year's market plunge by moving money into more conservative money-market funds and Treasury bonds missed out on the rally.

"Workers with a long-term view who stayed the course have been rewarded with a very nice bounce," said Scott David, president of workplace saving at Fidelity, which manages more than $1.3 trillion, including money in its mutual funds.

The average individual account balance rose 13.5 percent in the second quarter to $53,900, mainly due to rising stock prices but also from plan contributions by workers and their employers.

The recession and market decline that accelerated sharply last fall have left many companies hard-pressed to maintain the 401(k) matches they provide workers to encourage retirement savings. But more than 90 percent of the 17,500 plans that Fidelity administers for companies have left the percentage they match unchanged since September, rather than reducing it or suspending matches altogether.

"Employers remain committed to their employees' retirement savings," David said.

The figures released Wednesday are based only on workplace savings plans administered by Fidelity, which estimates its share of that market at about 25 percent.

Last fall's market plunge left many investors more nervous about stocks, a trend reflected in Fidelity's data. About 68 percent of 401(k) contributions in the first half of this year went into stocks, compared with around 75 percent for the past few years. Most of the rest went into bonds or other generally conservative investments such as money-market funds.

Despite the latest quarter's workplace savings gains, Fidelity highlighted weaknesses among participant age groups that could jeopardize their financial health in retirement.

Although enrollment is rising among those in their 20s, just 44 percent of plan-eligible workers in that age group are participating, Fidelity found.

"That creates a savings gap that is very difficult to overcome later," David said.

Among those in their 30s and 40s, participation jumps to more than 65 percent, with those workers deferring an average 7.7 percent of their pay. But 23 percent of that group has one or more outstanding loans against their 401(k), and more than one in 10 started such a loan over the past 12 months, Fidelity said. Often, such loans are taken out to buy a home, save for children's educations, or respond to a financial emergency.

"In times like these where markets rebound, having that loan outstanding will reduce your portfolio's overall rate of return," David said.

As for those 50 and over and close to retirement, more than 70 percent of those eligible participate in workplace savings plans, with contributions averaging 10 percent of pay. But in many instances, that group's 401(k) portfolios contain mixes of assets that may put their finances at risk in retirement.

More than 11 percent of the "pre-retiree" group had no exposure to stocks in their 401(k)s.

"The likelihood that their account balance will grow and keep pace with inflation throughout retirement is very low," David said.

At the other end of the spectrum, another 14 percent are entirely invested in stocks, leaving them especially vulnerable to another market downturn.

To address such mismatches, more and more 401(k) plans now put participants into target-date or lifecycle mutual funds that automatically adjust asset mixes and dial down risk as an investor approaches retirement.

Copyright 2009 The Associated Press.  All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at