America’s best and most generous 401(k)s «
How generous is your employer’s 401(k) plan?
Shutterstock.comTo retain top talent, some firms up their 401(k) ante.It’s an important question – and one that not many employees know the answer to.
According to BrightScope, a research company that rates nearly 50,000 employer-sponsored 401(k) retirement plans, the 30 most generous employers in the country contributed an average of $31,000 to each employee’s 401(k) account last year. In contrast, the average employer contributed a mere $4,184 per employee.
The scale of these companies’ contributions is particularly striking when you consider that the maximum that employees can contribute to their own accounts is currently $17,500 a year — $23,000 for those aged 50 and over.
“Generosity is an important means for companies to recruit and retain top employees,” says Brooks Herman, head of data and research at BrightScope.
When assessing 401(k) plans’ generosity, BrightScope tallies up the dollar amount each company contributes, on average, per employee in matching contributions and profit sharing. It gives companies extra points for allowing employees to fully vest in these contributions immediately upon enrolling in a plan.
Not surprisingly, the top 30 firms include several medical groups and law and consulting firms. (Click here for a PDF of the full list.) In these industries, salaries are high. As a result, so are the amounts employees tend to contribute to their 401(k) accounts. This, in turn, obligates employers to make hefty matching contributions. These industries also tend to sponsor generous profit-sharing programs, says Herman.
The ten most generous employers are:
1.Sullivan & Cromwell LLP
2.North American Partners in Anesthesia LLP
3.Oregon Anesthesiology Group P.C.
4.Frontier Refining & Marketing Inc.
5.O’Melveny & Myers LLP
7.Shearman & Sterling LLP
8.Anesthesia Service Medical Group, Inc.
9.Cravath, Swaine & Moore, LLP
10.Bryan Cave LLP
Among plans on the top 30 list, the average account balance is almost $500,000. That’s five times the $99,061 average for plans in BrightScope’s database.
Of course, corporate generosity isn’t the only measure of a 401(k) plan’s quality. When assigning an overall rating of one (the worst) to 100 (the best), BrightScope looks at over 200 different data points, says Herman. Other important factors to consider include the plan’s average account balance, participation rates, and fees, which—when high–significantly reduce investment returns and balances.
According to a report released by Brightscope last month, the top overall 401(k) plans in 2013 included a retirement plan for National Football League players and two aimed at airline pilots; pharmaceuticals and energy, two other high-paying industries, also feature prominently. Here are the top 10 (click here for a PDF of the top 30):
1.NFL Player Second Career Savings Plan
2.The Savings Plan of Saudi Arabian Oil Company
3.Southwest Airlines /quotes/zigman/241463/delayed /quotes/nls/luv LUV 0.29% Pilots’ Retirement Savings Plan
4.Wellington Retirement and Pension Plan
5.United Airlines /quotes/zigman/617037/delayed /quotes/nls/ual UAL Pilot Directed Account Plan
6.Amgen /quotes/zigman/19815/delayed /quotes/nls/amgn AMGN Retirement Savings Plan
7.Novartis Corp. /quotes/zigman/278066/realtime CH:NOVN Investment Savings Plan
8.Bristol-Myers Squibb Co. /quotes/zigman/220498/delayed /quotes/nls/bmy BMY Savings and Investment Program
9.Southern California Permanente Medical Group Retirement Plan
10.Anadarko /quotes/zigman/217978/delayed /quotes/nls/apc APC Employee Savings Plan
To look up a current or prospective employer’s 401(k) plan rating, go to www.brightscope.com and type the employer’s name into the search box.
When weighing overall compensation, keep in mind that the 401(k) plan is only one piece of the pie. Aside from salary, benefits, and 401(k) plan generosity, take into account perks including stock-option grants, Herman adds.