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 ThinkAdvisor’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.
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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% 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% 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% of its participants.
No state can claim a majority of its participants in the highest-performing plans. Delaware came the closest, with 43.3% 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% of Pennsylvania’s participants are in the highest-performing plans, while 40.1% are in low-scoring plans.