Washington, D.C. – April 16, 2015 – ALM’s 401(k) intelligence provider Judy Diamond Associates has completed an analysis of new 401(k) plans launched in 2013, the most recent year for which data is available, and discovered that substantially fewer new plans launched in 2013 than in 2012 possibly meaning fewer people are starting businesses or new businesses find 401(k) plans a luxury they cannot afford.
There were 23,056 new plans launched in 2013, servicing a total of about 434,000 plan participants. These new plans held about $4 billion in plan assets at the end of the year. Of the eligible participants, 252,000 ended the year with an account balance, which yields only a 58 percent participation rate. It should be noted, however, that depending on plan design as many as 1,000 hours of service may be necessary for new participants to be eligible to contribute. Thus, the participation rate of 58 percent may reflect a lower level of participation than is actually occurring.
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Over the course of the year, employees contributed $861 million to their plans, or about $1,980 per participant. Over that same time period, their employers contributed $491 million through company-sponsored matching or profit-sharing arrangements. An additional $2.3 billion “other” contributions were made, which most often reflects individuals rolling their account balances over from a previous employer.
The greatest number of new plans was found, as expected, in the states with the largest populations of people and businesses, with California, New York and Texas leading the charge with a collective 7,226 new plans, or about one third of all new plans.
On a percentage basis, Nevada, Arizona and Colorado experienced the highest rates of new plan growth, with Nevada leading the pack at 6.29 percent. On the other end of the spectrum, Mississippi and Vermont experienced the least amount of new plan growth, each coming in at less than half of the growth rate of Nevada. The complete list is available at www.judydiamond.com.
This plan data and further analysis are available in Judy Diamond Associates’ Retirement Plan Prospector database. Retirement Plan Prospector is an online sales prospecting and market analysis tool used by financial advisors and asset managers across the industry.
For more information about this research, please contact us at judydiamond.com/about/contact or follow us on Twitter @401kFacts.
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