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The Worst 401(k) Plans

Written by Nickel - 20 Comments

Curious as to how your 401(k) plan compares to others? Business Week just published a list of the worst 401(k) plans based on criteria such as participation rate, default rate, fees, and employer match (see also “The Best 401(k) Plans). The full list includes fifty plans. I’ve listed the twenty worst plans below.

  1. Darden Restaurants
  2. Big Lots
  3. RadioShack
  4. Zale
  5. Compass Group USA
  6. Bob Evans Farms
  7. MPS Group
  8. O’Reilly Automotive
  9. Best Buy
  10. Pep Boys
  11. CSK Auto
  12. Lowe’s
  13. Whole Foods Market
  14. Bon-Ton Stores
  15. Safeway
  16. Northrop Grumman
  17. AutoNation
  18. Penske Automotive Group
  19. TCF Financial
  20. OfficeMax

The full list is heavily populated with restaurant chains and retailers. Other notable names include Borders, Kohls, Walmart, Burger King, Target, JC Penney, and Home Depot. Is your employer listed?

Oh, and here’s a bit of 401(k) trivia for you… Total 401(k) holdings across the United States stood at $3 trillion at the end of 2007. Fast forward one year to the end of 2008, and… Poof. $2.4 trillion. That’s $600B that just evaporated.

Published on March 27th, 2009
Modified on March 30th, 2009 - 20 Comments
Filed under: Retirement, Saving & Investing

About the author: is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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20 Responses to “The Worst 401(k) Plans”

  1. 1
    DDFD at DivorcedDadFrugalDad Says:

    Funny that it is mostly retailers . . . hourly workers taking it on the chin!

  2. 2
    Sarah Says:

    This is off topic but what can I do about my 403 (b) other than just ignore looking at it very closely? My lossses are very sad!!! I guess just hang in there?

  3. 3
    Adam @ Checkbook Diaries Says:

    Is it accurate to rate a 401(k) on participation? I’d think that could be more a reflection on the employees than the employer since they can’t be forced to participate. I’d also think that the quality of a 401(k) should largely be decided by the company match, fees, and what investments are available to participants. My last point is that even a “bad” 401(k) is probably better than no 401(k) at all.

  4. 4
    philip Says:

    I am with Adam above, I think the scale of participation is really skewing these results. It would be more interesting to compare based only on default rate, fees, and employer match, probably weighted towards the fees.

  5. 5
    TaxRascal Says:

    It was pretty lazy of Business Week not to adjust for income. I suspect that people making $50K from Darden or $50K from IBM will have similar participation rates — but many more people at IBM make $50K.

  6. 6
    jeff Says:

    Agreed on it being a bad survey. I can speak for target’s plan. 5% match on 5% contribution and the fees are very reasonable, if not low. We always get mailings on why it’s important to save. We can’t force people to take free money.

  7. 7
    Daniel Says:

    It’s important to remember that that $600B loss was a paper loss. It’s not like real money really existed and was really lost.

  8. 8
    Corporate Barbarian Says:

    Wow, I used to work for Northrop Grumman. The 401K plan used to be good when I was there. I’m just glad my current employer isn’t on that list.

  9. 9
    Zeb Says:

    “That’s $600B that just evaporated”
    When the market fails to provide the anticipated return and instead results in a loss, the money “evaporates”.

    But when that same money was suddenly appearing in our accounts it didn’t seem so strange.

    Into and out of thin air, only one is treated strange in the stock market.

  10. 10
    Mike J Says:

    Wait a second, Target matches 100% up to 5% of your base salary? That is GOOD!

    I’m at a very traditional company — they match 75% up to 6% of your base (meaning if you contrib 6%, they will contrib 4.5%). Although we also have a defined benefit (pension) plan — for now. I’m happy with that for the most part although the breadth of fund options leaves a bit to be desired. At the same time, I know of some folks here that just split their contribs evenly across all available funds so choice is not always a *good* thing, for some people at least.

    I’m kind of surprised that the 401(k) losses amounted to only 20% though. Figured it would be more.

    -Mike J

  11. 11
    SandwichArtist Says:

    My company matches 100% of your contribution, up to 10% of your base salary. If you make less than $50k, they kick in an extra 4% without you even having to contribute, and if you make between $50k-$70k, they give you 2%

  12. 12
    jared Says:

    I don’t see how Frito-Lay isn’t on the list, they only matched 50% on up to 4% of your pay. Not to mention the plans the funds they had through Fidelity were terrible performers even before the markets fell.

  13. 13
    Tim Says:

    I don’t know, I would think they should list the 20 largest companies which don’t offer a 401k as the 20 worst 401k plans.

  14. 14
    Mark Says:

    I think Tim has the best answer.

    I was glad to see my employer not listed, but I went to the sight and went through their index, and US Steel wasn’t listed. They match 100% up to 5% or 6% depending on seniority, and contribute seperately depending on your age from 5 – 8.5% (7.25% for me). Offered through Fidelity with choices from several Vanguard/TRP funds as well. I’m sure they would be listed among the top offered plans.

  15. 15
    Chris Says:

    Interesting that three of Northwest Arkansas’s largest employers (Wal-Mart, Tyson, J.B. Hunt) all make the list…

  16. 16
    Danielle Says:

    Does anyone know if any of these companies have different plans for the retail workers as they do for the administrative/IT/executive offices?

  17. 17
    Greg Says:

    Is there a list of the best companies? I wonder if there are any companies that give employees full options like choosing a 401k or a Roth and still matching up to a percentage? That would be a great employeer

  18. 18
    Debt-free Dan Says:

    The Best 401k list was just published on this site.

  19. 19
    James Says:

    If you click on the link for the full list, and then click on the BrightScope link on that page, you can check a single plan’s rating.

    I found it particularly interesting that some companies have multiple plans with vastly different ratings. For example, the poorly-rated (37/100 points) “Northrop Grumman Financial Security and Savings Program” is not the one that the vast majority of Northrop Grumman employees participate in (27,000 participants) — that one is the “Northrop Grumman Savings Plan” (130,000 participants) with a rating of 76/100.

  20. 20
    Trav Says:

    “Total 401(k) holdings across the United States stood at $3 trillion at the end of 2007. …end of 2008, and… Poof. $2.4 trillion. That’s $600B that just evaporated.”

    Bad statistician! Part of that is probably outflow. People do read the news, freak out, and stop their contribution to 401k plans. Not enough inflow to offset outflow, and holdings will drop even if money doesn’t evaporate.

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