Judy Diamond Associates Analysis Reveals Small 401(k) Plans Outperform Large Plans

Washington, D.C., August 5, 2014 – Judy Diamond Associates, the 401k plan intelligence provider of leading financial advisors, brokers and fund companies, today released an analysis of 401(k) plans by size, revealing that the smallest plans outperform the largest plans.

Very small 401(k) plans, with 10 or fewer participants, had an average plan score of 63.8 out of 100, based on the most recent form 5500 plan disclosure documents released by the Department of Labor. In contrast, those 401(k) plans with 100 or more participants averaged plan scores of 52.3 over the same period.

Plan Scores are calculated using an algorithm that considers key measures of a plan’s performance compared to other plans nationwide. Higher plan scores can result from comparatively higher participation rates, increases in contributions, higher rates of return, or an absence of certain signs of distress.

Only 1.4% of all 401(k) plan participants are covered by the smallest plans whereas nearly three-quarter, 73.4%, are in the largest plans. This divergence means that only a small percentage of workers have access to the strongest plans.

“This research underscores the needs for advisors who work with the largest 401(k) plans to continue to look for ways to improve their performance,” said Eric Ryles, managing director of Judy Diamond Associates. “By increasing automatic enrollment, restructuring their company match, and increasing participant education, a small portion of large plan sponsors can have a huge impact on the way we save for retirement.”

Some interesting highlights from the research include:

  • For both the largest and smallest plans, two of the top three industries represented were health care and finance.
  • While giant plans cover 73.4% of all participants, they represent only 2.9% of all plans.
  • Micro plans on the other hand cover only 1.4% of participants but include 37.0% of all plans.

Key Findings:

Size Total Participants, per Plan Average Plan Score Total Participants, All plans Total Plans
Giant 500+ 52.3 56,729,356 15,177
Large 101-500 52.3 10,255,922 50,047
Medium 51-100 53.3 4,138,646 58,309
Small 11-50 57.1 5,118,376 210,710
Micro 1-10 63.8 1,046,252 195,989

Judy Diamond Associates based this research on the most recently available 401(k) plan disclosure documents released by the Department of Labor, which are available in its Retirement Plan Prospector database. Retirement Plan Prospector is an intuitive and comprehensive online sales prospecting and plan analysis tool, providing insights to the defined contribution and defined benefits markets.

For more information about this research, please contact us at www.judydiamond.com/about/contact or follow us on Twitter @401kFacts.

Media Contact
Regina Marie Glick
[email protected]

Sales Contact
Eric Ryles
[email protected]



About Author: