The Worst 401(k) Plans

Published on March 27th, 2009 - 20 Comments
Filed under: Retirement, Saving & Investing
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20 Responses to “The Worst 401(k) Plans”

1. 1
   DDFD at DivorcedDadFrugalDad Says:
   March 27th, 2009 at 7:19 am

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

2. 2
   Sarah Says:
   March 27th, 2009 at 7:46 am

   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:
   March 27th, 2009 at 8:35 am

   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:
   March 27th, 2009 at 9:30 am

   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:
   March 27th, 2009 at 9:50 am

   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:
   March 27th, 2009 at 11:00 am

   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:
   March 27th, 2009 at 11:13 am

   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:
   March 27th, 2009 at 12:29 pm

   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:
   March 27th, 2009 at 1:41 pm

   “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:
    March 27th, 2009 at 3:47 pm

    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:
    March 27th, 2009 at 5:41 pm

    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:
    March 28th, 2009 at 12:10 pm

    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:
    March 28th, 2009 at 6:10 pm

    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:
    March 28th, 2009 at 8:14 pm

    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:
    March 29th, 2009 at 12:18 am

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

16. 16
    Danielle Says:
    March 29th, 2009 at 12:36 pm

    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:
    March 30th, 2009 at 12:19 am

    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:
    March 30th, 2009 at 8:52 am

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

19. 19
    James Says:
    March 30th, 2009 at 2:04 pm

    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:
    March 30th, 2009 at 3:32 pm

    “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.