States with Strong 401(k) Plans

March 5, 2014 ( – Connecticut has the highest concentration of strong 401(k) plans, according to an analysis by Judy Diamond Associates.
“The analysis looks at all the Form 5500 data in the country, identifying 401(k) plans that are performing well and are designed well,” Eric Ryles, managing director of Judy Diamond Associates, tells PLANSPONSOR. “These plans are evaluated using seven metrics, which include a plan’s rate of return, participation rate, participant loans as a percentage of plan assets, average participant contributions, change in average participant contributions, average employer contributions per participant, and change in average employer contributions.”

According to Ryles, “Plan participation is definitely the driver of producing successful retirement incomes. Plan design by itself is useless unless there are an adequate number of employees participating in a 401(k) plan.”

He adds that plan design can be useful, though, in helping foster greater plan participation, pointing to features such as automatic enrollment. In addition, how an employer structures matching contributions can be important, he says, and that does not necessarily mean an employer needs to make a larger contribution. Requiring an employee to contribute slightly more in order to get the matching employer contribution encourages larger account balances over the long term for employees and high asset figures for the plan.

Rankings are based on the percent of 401(k) plans receiving top plan scores for all 401(k) plans in each state. These plan scores were calculated with an exclusive algorithm that considers the key metrics and how each of those metrics compares to nationwide benchmarks. Plans receive scores up to 100; a top score for a plan is any score above 80.

According to the analysis, the 10 states with the highest concentration of strong 401(k) plans are:

1. Connecticut;

2. Wyoming;

3. Alaska;

4. Delaware;

5. Massachusetts;

6. Virginia;

7. Maryland;

8. New York;

9. California; and

10. Rhode Island.


The analysis also finds:

  • Had the District of Columbia been included in the list it would have been ranked first with 12.71% of all DC-based plans receiving high scores, more than twice the national average of 5.2%;
  • Wyoming has the fewest 401(k) plans of any state in the nation, but it has the second highest rate of good plans (6.79%);
  • About one-third of all 401(k) plans (32.3%) are located in one of the top 10 best performing states; and
  • Seven of the top 10 states are on the East Coast.

Plan scores are available in Retirement Plan Prospector, the firm’s 401(k) analysis and lead generation database. More information about the analysis can be requested at