Washington, D.C., April 1, 2014 – Judy Diamond Associates, the 401k plan intelligence provider of leading financial advisors, brokers and fund companies, today released an analysis of the top states with the fastest growing average 401k account balances per participant, revealing that solid market returns drove nationwide growth last year.
“Although balances were up across the board, the increases were not evenly distributed,” said Eric Ryles, managing director of Judy Diamond Associates. “There are very real differences in the best and worst states, with the top performer, Montana, doubling the rate of return of the bottom tier of performers, though the majority of states were fairly well grouped into two clusters of roughly 11% and 12%.”
The analysis compared average 401k account balances per participant in active plans in each state in 2011 and 2012, the most recent two years for which data is available. Nationwide, the average was $75,997 in 2012, up from $68,353 in 2011, or an 11% increase. While overall growth was up for the 470,000 plans included in the study, driven by strong market performance, that growth was tempered by declines in employer and employee contributions.
Although 401k growth rates were generally below the rate of return for the S&P, which was 15.83% in fiscal year 2012, Ryles explained that is not a cause for concern. “A well-designed 401k will offer a menu of options suitable for investors of all ages,” he said. “Participants with the highest balances, usually those getting close to retirement, should be focused more on capital preservation rather than capital growth. This means that they are in bond funds and stable value funds, which will inevitably underperform a benchmark like the S&P, but do so safely. The overall rate of return of the plan is limited as a result.”
It is worth noting that growth in the S&P index does not account for new money being contributed. Growth in account balances for 401k plans, however, includes both the return on existing investments as well as additional contributions made by employers and participants during the period
Some interesting highlights from the research include:
- North Dakota not only saw the least amount of growth year over year— only 7.82%— but it also had the lowest average account balance per participant of all states, $60,562.
- Montana, which had the highest growth rate at 16.27%, saw more than twice as much growth as North Dakota.
- Hawaii had the highest average account balance per participant, $92,952 in 2012, and was 39th in growth with 10.80%.
States by Growth in Average 401k Account Balance per Participant
| Rank | State | Average 2011 | Average 2012 | Growth Rate | |
|
1 |
Montana |
$70,835 |
$82,358 |
16.27% |
|
|
2 |
Wyoming |
$63,516 |
$73,798 |
16.19% |
|
|
3 |
Oklahoma |
$61,339 |
$70,381 |
14.74% |
|
|
4 |
Maryland |
$66,646 |
$76,312 |
14.50% |
|
|
5 |
Idaho |
$62,006 |
$70,528 |
13.74% |
|
|
6 |
Alaska |
$68,528 |
$77,748 |
13.45% |
|
|
7 |
Rhode Island |
$79,331 |
$89,886 |
13.30% |
|
|
8 |
Arizona |
$59,328 |
$66,987 |
12.91% |
|
|
9 |
Kansas |
$62,322 |
$70,233 |
12.69% |
|
|
10 |
Missouri |
$68,071 |
$76,704 |
12.68% |
|
|
11 |
Georgia |
$61,372 |
$69,102 |
12.60% |
|
|
12 |
Utah |
$54,318 |
$61,149 |
12.58% |
|
|
13 |
New Hampshire |
$65,999 |
$74,288 |
12.56% |
|
|
14 |
Vermont |
$69,401 |
$78,111 |
12.55% |
|
|
15 |
Alabama |
$63,361 |
$71,272 |
12.49% |
|
|
16 |
Connecticut |
$79,772 |
$89,622 |
12.35% |
|
|
17 |
Louisiana |
$63,489 |
$71,318 |
12.33% |
|
|
18 |
Indiana |
$64,441 |
$72,292 |
12.18% |
|
|
19 |
New Jersey |
$72,598 |
$81,086 |
11.69% |
|
|
20 |
South Dakota |
$58,339 |
$65,158 |
11.69% |
|
|
21 |
Iowa |
$72,057 |
$80,479 |
11.69% |
|
|
22 |
North Carolina |
$62,080 |
$69,307 |
11.64% |
|
|
23 |
Texas |
$58,132 |
$64,841 |
11.54% |
|
|
24 |
West Virginia |
$67,391 |
$75,141 |
11.50% |
|
|
25 |
Virginia |
$65,943 |
$73,462 |
11.40% |
|
|
26 |
Nevada |
$63,370 |
$70,555 |
11.34% |
|
|
27 |
New York |
$72,236 |
$80,423 |
11.33% |
|
|
28 |
Maine |
$68,663 |
$76,413 |
11.29% |
|
|
29 |
Massachusetts |
$72,481 |
$80,598 |
11.20% |
|
|
30 |
Tennessee |
$65,094 |
$72,363 |
11.17% |
|
|
31 |
Kentucky |
$66,919 |
$74,366 |
11.13% |
|
|
32 |
New Mexico |
$66,702 |
$74,099 |
11.09% |
|
|
33 |
Illinois |
$75,750 |
$84,132 |
11.06% |
|
|
34 |
Washington |
$70,583 |
$78,380 |
11.05% |
|
|
35 |
Wisconsin |
$70,243 |
$77,991 |
11.03% |
|
|
36 |
Arkansas |
$66,613 |
$73,956 |
11.02% |
|
|
37 |
Ohio |
$69,554 |
$77,134 |
10.90% |
|
|
38 |
Florida |
$61,668 |
$68,341 |
10.82% |
|
|
39 |
Hawaii |
$83,895 |
$92,952 |
10.80% |
|
|
40 |
Nebraska |
$71,018 |
$78,643 |
10.74% |
|
|
41 |
Pennsylvania |
$69,519 |
$76,911 |
10.63% |
|
|
42 |
Minnesota |
$69,620 |
$76,819 |
10.34% |
|
|
43 |
California |
$71,297 |
$78,575 |
10.21% |
|
|
44 |
Colorado |
$66,624 |
$73,345 |
10.09% |
|
|
45 |
Delaware |
$70,940 |
$78,077 |
10.06% |
|
|
46 |
Michigan |
$68,827 |
$75,626 |
9.88% |
|
|
47 |
Oregon |
$72,244 |
$79,008 |
9.36% |
|
|
48 |
District of Columbia |
$79,706 |
$86,947 |
9.08% |
|
|
49 |
South Carolina |
$68,534 |
$74,691 |
8.98% |
|
|
50 |
Mississippi |
$66,311 |
$71,675 |
8.09% |
|
|
51 |
North Dakota |
$56,170 |
$60,562 |
7.82% |
|
| Nationwide |
$68,353 |
$75,997 |
11.18% |
Judy Diamond Associates based this research on the most recently available 401(k) plan disclosure documents released by the Department of Labor, which are available in its Retirement Plan Prospector database. Retirement Plan Prospector is an intuitive and comprehensive online sales prospecting and plan analysis tool, providing insights to the defined contribution and defined benefits markets.
For more information about this research, please contact us at www.judydiamond.com/about/contact or follow us on Twitter @401kFacts.
Media Contact
Regina Marie Glick
646-746-8878
[email protected]
Sales Contact
Eric Ryles
202-370-4811
[email protected]
