Perhaps no greater factor will determine the country's retirement security than participation levels in employer-sponsored defined contribution plans and, in that regard, no state may be better off than Delaware.
New data from Judy Diamond Associates, a provider of 401(k) plan analysis to RIAs, brokers and fund companies, show that nationwide, 71.6 percent of eligible participants had balances in their 401(k) plans at the end of 2013.
"The best plan in the world is useless until a participant actually begins to contribute and build an account balance," said Eric Ryles, managing director of Judy Diamond Associates, a division of Summit Professional Networks, BenefitPro's parent company.
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The latest data show significant state-by-state disparity in participation rates, according to Ryles.
Delaware ranked the highest, with 85.8 percent of eligible participants' accounts showing some level of contribution.
Connecticut, Iowa, New York and Arkansas rounded out the top five states, with participation rates between 77.5 percent (Arkansas) and 83.1 (Connecticut).
Washington, D.C. has a rate of 78.6 percent — good enough to break into the top five if it were to be included in the state list.
Levels at the lower end of the spectrum are far less promising, and raise the question of whether state retirement policies are affecting contribution rates.
Nevada came in dead last, with only 53 percent of eligible participants contributing to their 401(k)s.
Florida, Oklahoma, Utah and Maryland rounded out the bottom five, with participation rates falling between 57 and 63.8 percent.
In analysis released last August, Judy Diamond found that nine states had a majority of their participants in low-scoring plans. The data provider mined Form 5500 filings, and developed an algorithm to measure the strength of a plan's design, management and investment performance.
A look at that list shows some familiar states with the new data on participation rates.
In Nevada, 80.6 percent of participants are in low-scoring plans. Florida and Maryland, two of the lowest performing states relative to participation rates, also had more than half of the their enrollees in the lowest performing plans.
Delaware, with its leading participation rate, also had the highest number of participants in the highest performing plans.
And Arkansas, another state with relatively high participation rates, had the lowest number of participants in the lowest performing plans.
Any given company can design a productive plan with high participation rates, no matter the tendencies of the state they reside in, according to Ryles.
But the trends are nonetheless telling, he said.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
