The average 401(k) account (search) balance rose 10 percent in 2004, reaching a five-year high of $61,000, according to preliminary study data provided by Fidelity Investments (search).

"It's a combination of market action and net contributions," said Steve Deschenes, executive vice president of institutional retirement services with Fidelity, a Boston investment firm.

Still, the average 401(k) balance remains below 1999 levels of $64,000. In 2000, when the stock market bubble burst, the average 401(k) balance fell to $55,000 and continued to spiral downward until it hit $44,000 in 2002. The average balance began to tick higher again in 2003 when it again hit $55,000, according to Fidelity data.

Workers appear to be contributing roughly the same percentage of their salary to their 401(k) plans as they have in years past, indicating that stock market moves are primarily responsible for the recent declines. Average workers deferred 7 percent of their pretax salary to an employer-sponsored 401(k) in 2004, a percentage that has remained steady since 2001, according to Fidelity. Meanwhile, 66 percent of eligible workers participated in their 401(k) plan in 2004, the same as in 2003.

Employers, meanwhile, increased the average number of investment options they offered in their 401(k) plans to 20 in 2004, compared with 18 in 2003, the study said. In 1999, the average number of investment options was 10.

Lifecycle funds (search) also grew more popular among Fidelity's 401(k) clients in 2004, when 78 percent of plans offered them, compared with 72 percent in 2003. Lifecycle funds are being touted as a hassle-free 401(k) option because the asset-allocation is adjusted automatically based on the investor's target retirement date.

The study was based on an analysis of 10,800 defined-contribution plans, which represents about 8.6 million participants.