The number of millionaires in 401(k) and IRA plans has reached a new record, with a growing number of millennials joining the ranks.

• In the third quarter, Fidelity, the largest 401(k) plan provider in the U.S., reported that average retirement account balances reached new highs due to both consistent savings efforts and market gains.
• For the first time, millennials joined the group of 401(k) and IRA millionaires, whose numbers also reached all-time highs.

As the markets tested record highs, retirement savers reaped the benefits.

Fidelity, the largest provider of 401(k) plans in the US, reports that the average 401(k) plan balance increased by 23% in the third quarter compared to the same period last year, reaching a record high of $132,300. The financial services firm manages over 49 million retirement accounts.

In the third quarter of 2024, the average individual retirement account balance increased by 18% year over year to $129,200.

Number of 401(k) millionaires jumps 9.5%

The number of 401(k) accounts with a balance of $1 million or more increased by 9.5% to a record 497,000 as of Sept. 30, according to Fidelity.

The number of millionaires created by IRA increased by nearly 5% to a record 418,111.

Fidelity Investments' president of workplace investing, Sharon Brovelli, stated that contributions to retirement savings vehicles are remaining stable, with some even increasing, indicating a continued commitment to saving for retirement.

The average 401(k) contribution rate, including employer and employee contributions, is currently 14.1%, which is slightly below Fidelity's recommended savings rate of 15%.

According to Douglas Boneparth, a certified financial planner and president and founder of Bone Fide Wealth, these all-time highs are likely due to market appreciation, but if contributions remain strong, that's a positive outcome.

The Biden-era retirement rule may be at risk under Trump. Employers are adding 401(k) plan matches for workers with student loans. "Dynamic pricing" was a top contender for word of the year.

Fidelity's vice president of thought leadership, Mike Shamrell, stated that positive savings behaviors were crucial to achieving better results.

The major indexes had a great year, with the up 31% year to date, the notching a 27% gain, and the rising more than 16%.

Saving for the long term has proven to be beneficial, according to Shamrell.

Despite the majority of savers who have reached the threshold being close to retirement age, "we observed some millennials also join this group," Shamrell stated.

More retirement savers tap their 401(k)

The percentage of workers who borrowed from their 401(k) accounts, including for hardship reasons, increased to 18.7%, from 17.6% the previous year.

Shamrell stated that he would like to see these numbers decrease to zero.

Under federal law, workers can borrow up to 50% of their account balance or $50,000, whichever is less. Nevertheless, many financial experts recommend against withdrawing from a 401(k) before exploring all other options because doing so will also result in the loss of the power of compound interest.

Boneparth, a member of CNBC's Advisor Council, stated that from a planner's perspective, this area is considered a last resort.

Other research indicates that many households are heavily reliant on credit cards to meet their financial needs.

The Federal Reserve Bank of New York reports that Americans' credit card debt has increased by 8.1% to a record $1.17 trillion.

According to Fidelity's Shamrell, borrowing from a retirement account may be a better option than relying on high-interest debt during times of financial stress.

Unlike credit card and other debt, 401(k) borrowers pay themselves back with interest at lower rates, which are currently more than 20% today — near an all-time high.