Most 401(k) plan participants have continued to invest for retirement despite difficult market conditions, according to the Investment Company Institute.

In a survey of 22.5 million 401(k) participant accounts, the Washington trade group found that even though account balances are down because of the drop in U.S. stock markets, the vast majority of savers are still investing.

"Workers want to keep the basic strengths of 401(k) — tax-favored savings, individual choice in investing, and personal control of these retirement assets," Paul Schott Stevens, the ICI's president and chief executive officer, said in a press release.

The survey, which covered the first 10 months of 2008, found that 3% of plan participants stopped contributing to their retirement plan; 3.7% of participants withdrew from their accounts, including 1.2% taking hardship withdrawals; and 15% of participants had loans outstanding, in line with the 13% to 17% reported since 1996 in annual studies conducted by the ICI and the Employee Benefit Research Institute.

In a separate survey, the group found that Americans want to preserve the current features and flexibility of retirement plans and want Washington to emphasize strengthening Social Security.

The survey of 3,000 households, conducted from late October to early December, found that 72% reject the notion of reducing tax advantages for defined contribution retirement plans and individual retirement accounts. Even among households that did not own such accounts, 62% opposed reducing these tax incentives.

According to the survey, Americans do not want the government directing retirement investments — 87% reject a proposal that the government not allow individuals to make their own investment decisions in retirement accounts.

Participants in 401(k) and similar plans said the plans help them save and invest. Ninety percent of the 1,575 households owning such plans agreed with the statement that their plan "helps me think about the long term, not just my current needs." Eighty-eight percent said "payroll deduction makes it easier for me to save," and 81% said "the immediate tax savings from my retirement plan are a big incentive to contribute."

Bolstering Social Security is a much higher priority for Americans than replacing 401(k) plans with a government-run retirement system, the survey concluded.

Mr. Stevens said, "Congress should give workers — particularly older workers — the opportunity to contribute more, to help them make up for ground lost in the last year," he said. In the longer term, reforms should encourage more employers to offer plans, and make it easier for workers to participate, he said. Workers should have access to sound investment advice, strong investment options, and "information that they can understand and use on key topics, such as investment risks, returns, and fees," for all options in their plans, he said.

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