New Judy Diamond Associates Analysis Reveals the Five Most Common 401(k) Plan Red Flags

Washington, D.C., April 16, 2014 – Judy Diamond Associates, the 401(k) plan intelligence provider of leading financial advisors, brokers and fund companies, today released an analysis of plan performance indicators, revealing the five most common 401(k) plan red flags.

The 17 red flags included in Judy Diamond Associates’ Retirement Plan Prospector tool are based on 401(k) industry best practices identified and refined through consultation with leading financial services firms.  The flags are indicators that evaluate whether a plan is underperforming, is poorly designed, or has reached certain thresholds that suggest it may need new services.

“Identifying the most common problems and challenges facing the almost 600,000 401(k) plans nationwide can empower financial advisors to address the concerns that are keeping their clients up at night,” said Eric Ryles, managing director of Judy Diamond Associates.  “In that way, our subscribers are able to better prepare their clients for the future and cement their own status as a consultant and valued partner, rather than ‘just’ a 401(k) vendor.”

Red Flags are key indicators of a plan’s general health and value as a sales prospect for an advisor or other provider.  They are calculated in Judy Diamond Associates’ 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.

Five Most Common 401(k) Plan Red Flags


# OF 401(k) PLANS


Bottom 10% in Employer Contributions



High Average Account Balance



Plan Recently Terminated



Reduced Employer Contributions



Corrective Distributions Issued



About the Red Flags:

  • The bottom 10 percent is calculated based on the value of the contribution, not the number of plans offering each value.  That means that a clustering of plans around certain values, especially zero, can result in more than 10 percent of plans offering employer contributions ranked in the bottom 10 percent by value.
  • Having a high average account balance per participant indicates that there may be participants who are nearing retirement and approaching the need for new, individual financial advice.
  • Recently terminated plans may similarly offer advisors opportunities to rollover participants into individual retirement accounts.
  • Plans that have reduced their employer contributions may benefit from better plan design.
  • Plans that have issued corrective distributions may be experiencing flaws in the way their plans were designed or rolled out.  Participation rates and employee contribution levels at these plans may be lacking, and they may be receptive to better advice, education and products from new providers.

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.

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

Media Contact
Regina Marie Glick
[email protected]

Sales Contact
Eric Ryles
[email protected]

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