NEW YORK (MainStreet) If you're doing the right things: saving for retirement by contributing to your 401(k) plan, getting the maximum match from your employer -- if one is offered -- and investing prudently, it wouldn't seem to matter where you live.
But apparently it does. In a review of plan disclosure documents issued by the Department of Labor, Judy Diamond Associates found a disturbing trend: residents in some states are more likely to participate in a low performing 401(k) plan.
Nevada is revealed as being the worst state in the nation in which to participate in a 401(k). The state has the highest concentration of participants in low performing plans, according to Diamond.
"Workers in the states with the highest concentration of participants in low scoring plans are, statistically, disadvantaged compared to workers in other states when it comes to achieving positive retirement outcomes," said Eric Ryles, managing director of the research firm. "While individual companies can of course buck this trend, the data shows that the average participant of a plan for a Nevada-based company will have a more difficult time meeting their retirement goals than the average participant of a plan for a California-based employer."
Analyzing Department of Labor data for company-sponsored retirement plans, the research firm scores 401(k)s on a scale of 1-100 based on design, management and performance. For the purposes of this study, the firm says any score below 50 was considered "low." A state's ranking in the survey was determined by the percentage of all participants in each state that were enrolled in a low scoring plan.
Arkansas had the lowest rate of participants in low scoring plans, 15.0%. At the other end of the scale, Nevada had the highest concentration of participants in low scoring plans, with 80.6% of enrollees in plans receiving scores less than 50.
Slicing the data in another way, "No state had a majority of its participants in high scoring plans, though Delaware came closest with 43.3% of participants in high scoring plans, or plans with scores of 75 or higher," the report says.
The nine states with the majority of their 401(k) plan participants in low scoring plans are: Nevada (80.6%), Florida (63.2%), Louisiana (57.3%), Kentucky (55.7), Rhode Island (54.2%), North Dakota (53.9%), Idaho (53.0%), Maine (51.2%) and Maryland (50.8).
--Written by Hal M. Bundrick for MainStreet