By Ross Kerber

BOSTON (Reuters) - A record number of U.S. workers
are tapping into their retirement accounts to make it through
the economic downturn, Fidelity Investments found in a survey
released Friday.

Among the 11 million workers whose 401(k) plans are run by
Fidelity, 11 percent took out a loan from their plan during the
12 months ended June 30, the company said, up from 9 percent at
the same point a year earlier.

By the end of the second quarter, plan participants with
loans outstanding against their 401(k) accounts had reached 22
percent versus 20 percent a year earlier.

Hardship withdrawals were also on the rise, although in
absolute terms remain quite low.

During the quarter, 2.2 pct of Fidelity's active 401(k)
participants took a hardship withdrawal, up from 2 percent a
year earlier, and another peak, Fidelity said.

Often those withdrawals were used to prevent foreclosure on
a home or pay college tuition.

"People have been looking to their 401(k) plans as a source
of relief to help them meet financial hardships," said Beth
McHugh, a Fidelity vice president who oversees the area. "For
many individuals that is their primary savings vehicle."

Loans and withdrawals were highest among workers between 35
to 55 years old, Fidelity found, peak earnings years.

Fidelity, the Boston mutual fund giant, is also the
country's largest administrator of retirement savings plans
like 401(k)s, making its quarterly survey a closely watched
barometer of saver behavior.

As more companies end traditional "defined benefit" plans
like pensions, workers are relying more on "defined
contribution" plans like 401(k)s to carry them through
retirement.

To encourage savings, tax codes and other rules discourage
early withdrawals. Distributions from 401(k) plans are taxed as
ordinary income, and withdrawals by individuals younger than
aged 59 1/2 may be subject to an early withdrawal penalty.

Balances in 401(k) plans, which tend to be held in mutual
funds dominated by U.S. equities, slipped in the second quarter
as major stock indexes tumbled more than 10 percent.

The average 401(k) balance as of June 30 was $61,800, up 15
percent from a year ago but down 7.6 percent from $66,900 as of
March 31.

Fidelity found signs of continued thrift in the workforce.
The average percentage of salary saved in a 401(k) held steady
at 8 percent, similar to the rate in the first quarter, while
32 percent saved 10 percent or more of their pay.

But the rising rates of loans and withdrawals show more
people have turned to their savings to cover basic expenses,
McHugh said. She added that second-quarter rates tend to be
higher as parents look for ways to cover college tuition.

Nevin Adams, editor at plansponsor.com, a site for the
retirement-planning industry, said the results were somewhat
surprising since other plan providers had reported falling
rates of loans and withdrawals recently.

But since Fidelity serves many smaller businesses and more
varied geographies than do competitors, it may have come across
a trend sooner than others, Adams said.

"Unemployment benefits have been running out for people,
and it's possible they're seeing a double-dip of withdrawals
from people trying to make ends meet," he said.

Plansponsor.com estimates that of the $2.7 trillion that
corporate employees keep in 401(k) plans, Fidelity serves as
"recordkeeper" for the largest amount of assets, $838 billion.

TIAA-CREF of New York was in second place with $320
billion, followed by ING Group with $254 billion and
Hewitt Associates Inc with $249 billion.
(Reporting by Ross Kerber; Editing by Ros Krasny and Steve
Orlofsky)