NEW YORK – Average balances of 401(k) retirement plans have reached the highest level since Fidelity Investments began tracking account values in 1998.

The average account balance rose to $74,900 as of March 31, an increase of almost 12 percent from last year, according to a report released Wednesday by the Boston-based mutual- fund manager. Fidelity, the largest provider of 401(k)s, has 11 million participants in almost 16,500 employer-sponsored defined contribution plans.

“This for us is an all-time high” since 1998, said Beth McHugh, vice president of market insights for Fidelity. “The other positive indicator that we saw was more participants increasing deferrals versus decreasing them.”

About 10 percent of workers increased their savings rate during the first quarter, the most since Fidelity started reporting on that number in 2006, said McHugh, who is based in Covington, Ky. Participants saved an average 8.2 percent of their salaries, a rate unchanged since the first quarter of 2009, she said.

A 401(k) plan generally lets employees defer a portion of their wages to the account on a pretax basis. Contributions are limited to $16,500 for 2011, and those age 50 or older may set aside an additional $5,500, according to the Internal Revenue Service.

Americans held $3.1 trillion in 401(k)s as of Dec. 31, according to the Washington-based Investment Company Institute, a trade group for the mutual-fund industry. The ICI released a separate study Tuesday that said the percentage of participants who stopped contributing to their defined- contribution plans declined last year, while loan activity increased.

About 2.4 percent of workers halted contributions in 2010, compared with 3.4 percent in 2009, according to the ICI, which surveyed administrators of more than 23 million accounts. The share of those with loans outstanding rose to about 18 percent as of December, compared with about 17 percent at year-end 2009, the report said.

As life expectancies increase and companies shift from traditional pensions to 401(k) retirement plans, worker confidence about having enough money in retirement has declined. More than a quarter of U.S. workers said they’re “not at all confident” about their ability to afford a comfortable retirement, the highest percentage in two decades, according to a March report by the Washington-based Employee Benefit Research Institute.

Men have a life expectancy of 17 years at age 65, based on government tables from the National Center for Health Statistics. For women it’s 20 years.

About two-thirds of the increase in account balances in the first quarter was driven by market performance, while one-third was from participant contributions, said Fidelity’s McHugh. The Standard & Poor’s 500 Index gained about 13 percent in the 12 months through March 31.

“A lot of people will say $74,000 on average is not that great,” McHugh said. “If you look at those that are 10-year continuous participants, their average balance is about $191,000, and if they’re age 55 years or older and are a 10-year continuous participant their average is about $233,800.”

Those figures show that contributing to a 401(k) early, at a “meaningful” rate and continuing to save makes a difference, she said.