By Nick Thornton
Nevada is the worst state in which to have a 401(k) plan
, while Florida, Louisana and Kentucky, among a few more, aren't faring much better, according to data from Judy Diamond Associates.
The retirement plan data publisher, a division of BenefitPro’s parent company, Summit Professional Networks, found that nine states in all have a majority of their participants in low-performing plans.
Judy Diamond mines data from Form 5500 filings with the Department of Labor, and then calculates plan scores with an algorithm that measures the strength of a plan’s design, management and the performance of its assets.
“Workers in the states with the highest concentration of participants in low-scoring plans are, statistically, disadvantaged compared to workers in other states when it comes to achieving positive retirement outcomes,” said Eric Ryles, managing director of Judy Diamond Associates.
Ryles points out that any given company can design a better plan no matter the tendencies of other companies in its state. But the trends are nonetheless telling, he said.
“The data shows that the average participant of a plan for a Nevada-based company will have a more difficult time meeting their retirement goals than the average participant of a plan for a California-based employer,” said Ryles.
Plans are scored on a 100-point basis. Those with a score of less than 50 are classified as “low.”
More than 80 percent of Nevadans are in low-performing plans, according to Judy Diamond’s research. Eight other states have more than half of their participants in low-performing plans, with Maryland rounding out the list with 50.8 percent of its participants in the worst-performing plans.
On the flip side, Arkansas had the lowest share of participants in its lowest-performing plans, just 15 percent of its participants.
No state can claim a majority of its participants in the highest-performing plans. Delaware came the closest, with 43.3 percent of participants in the highest-performing plans, those scoring 75 or above on the Judy Diamond rating system.
Pennsylvania, meanwhile, had the lowest concentration of workers in the highest-scoring plans, among the five largest states by number of plan participants, according to the study.
Only 5.9 percent of Pennsylvania’s participants are in the highest-performing plans, while 40.1 percent are in low-scoring plans.
California, Illinois, New York and Texas are the four other states in the largest state segment, by numbers of participants.
Here are the nine states with the majority of their 401(k) plan participants in low-scoring plans:
1. Nevada, 80.6%
2. Florida, 63.2%
3. Louisiana, 57.3%
4. Kentucky, 55.7%
5. Rhode Island, 54.2%
6. North Dakota, 53.9%
7. Idaho, 53%
8. Maine, 51.2%
9. Maryland, 50.8%
Originally published on BenefitsPro.com