BrightScope (a Strategic Insight business), the leading provider of independent financial information and investment research to the USA retirement industry, announced today the Top 30 401k Plans of 2016…
“This is our ninth year tracking America’s best 401k plans,” said Brooks Herman, Vice President, Data & Research, at BrightScope. “Over the years, the average 401k rating keeps improving, showing that America’s employers and employees are committed to improving their 401k outcomes.”
Which traits define the plans that make the Top 30 Plans List?
1. Generous Company Contributions
Company contributions are a major component of the BrightScope Rating and thus the Top 30 Plans List. Offering a match or profit sharing contribution to the plan is a great incentive for employees to participate and defer their salary towards retirement. Delta Pilots Savings Plan and American Airlines, Inc. 401(k) Plan for Pilots were some of the most generous plans on the Top 30 List. The average company generosity was over $15,000 per participant and can be in the form of a company match or profit-sharing.
2. Immediate Plan Eligibility
A plan’s eligibility period is the length of time between when an employee is hired and when they are eligible to participate in the plan. Short plan eligibility requirements allow new hires to save more towards retirement. This year’s Top 30 list includes twenty-six plans with immediate eligibility. Removing barriers to saving is important to the top plans.
3. Immediate Vesting
While a participant’s elective deferrals are always immediately vested, company contributions can take up to six years to vest depending upon the plan. Twenty-nine of the Top 30 plans offer immediate vesting of company contributions thus ensuring that the money in their account is theirs to keep.
4. Low Fees
Plan costs can greatly affect investment returns therefore altering participant account balances. BrightScope’s Total Plan Cost (TPC) calculations include investment expense ratios and administrative costs. Among plans found in this year’s Top 30 list, the average Total Plan Cost dropped to 0.22%.
5. High Participation Rates
The first step in saving for retirement is participating in an employer’s retirement plan. We have seen participation rates climb to over 97% in this year’s list.
6. Salary Deferral
Plans within the Top 30 list average over $14,100 in salary deferrals per participant. Companies can incentivize their employees to save in a number of ways.
Statistics of the 2016 Top 30 List: