The 401(k) is back. Now let the government do its part: Head off the inflation that's been invited by these crazy trillion-dollar deficits.

Remember the "wipeout" talk about retirement plans at the bottom of the recession?

Well, there goes (for awhile) another premature obituary for capitalism. Retirement accounts have been through the valley and are seeing sunshine again.

Fidelity Investments, the biggest administrator of 401(k) plans, indicated the other day that its customers are back to normal, if not to the bull market heights of a couple of years ago. Average 401(k) balances have regained the September 2008 levels they held before Wall Street's major skid.

How'd it happen? A combination of recent investment growth, matching contributions from employers, and employees turning off the gloom-and-doom and staying the course.

Far-seeing workers apparently just kept putting it away and benefitting as the Standard & Poor's 500 Stock Index, for one, has slogged 22 percent back up the trail so far this year.

Mutual fund giant Fidelity reviewed the 11 million 401(k) accounts it administers (at 17,000 employers) and found the quarter ended September 30 "actually moved us into positive territory," Michael Doshier told Bloomberg News. He is vice president of the firm's workplace investing group. "I think that surprised a lot of people."

An average 401(k) account-holder at the end of September looked at a balance of $60,700, up 13 percent from June. And 28 percent up from the doldrums of March 31, when it stood at $47,500. (The S&P 500 had plunged 42 percent from the previous Oct. 1.) Typical 401(k) accounts hold a mix of equities, bonds and cash.

Fidelity said 27 percent of companies that suspended their 401(k) matching contributions are beginning to make those payments again. That's not a full catch-up, however; 34 percent had either reduced or eliminated the sweetener since January 2008. Industrywide in 2008, 49.8 million American workers participated in 401(k) plans with assets totaling $2.3 trillion.

The employer match is one of two great inducements to participate. It means virtually "free" dollars from the boss to add to what the employee can put away. And second comes an immediate saving on the latter's income tax. So it's a good deal all around.

It's a fine alternative to a conventional pension, which is growing scarcer nowadays. The funding obligations are just too heavy for many struggling companies. States and cities which have been overly generous to union employees are running into the same crisis.

But 401(k)s represent a huge societal bet on free enterprise. They'll pay off in retirement if companies make profits and the general economy prospers. Runaway inflation would cheapen the dollars put away by tens of millions of trusting workers.

The comeback of 401(k) values is a sign the government won't be so stupid and callous as to recklessly inflate. But fingers are crossed.

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