What's the criteria for producing a superior 401(k) retirement plan?
You can start with total plan cost, a company’s generosity and investment menu quality, which are among the major criteria used by independent retirement plan ratings provider BrightScope to come up with its fourth annual Top 30 401(k) plan ratings of companies with more than $1 billion in plan assets.
Other plan criteria applied by BrightScope include employee participation rates, account balances and salary deferrals. Plans in this year’s top 30 list also averaged over $12,700 in salary deferrals per participant, up from $11,600 in 2011.
The Marathon Oil Company Thrift Plan, in its first appearance on the list, had the top rated 401k plan of the year, bumping last year’s leader, Southwest Airlines to No.3. Meanwhile, the Savings Plan of Saudi Arabian Oil Company took the No. 2 spot for the second year in a row.
Other newcomers to the top 30 plans include: Google’s 401(k) Savings Plan; the Roche Savings and Deferral plan; the Cisco Systems Inc. 401(k) Plan, and the Altria Client Services Inc. Deferred Profit-Sharing Plan for Salaried Employees, debuting at No. 11, No. 18, No. 21 and No. 25, respectively.
The Deloitte Profit Sharing Plan slipping 26 places, from No. 4 to No. 30, while IBM’s 401k Plus Plan had the most upward movement in 2012, climbing from 22nd to 14th.
In terms of the investments contained in the top 401(k) plans, target-date funds made inroads this year with the average top 30 plan in 2012 having 4.9 percent of its assets in a target-date fund compared to only 3.6 percent in 2010. Index funds growth continued, this year accounting for 29.5 percent of assets in the top 30 plans of 2012, compared to 25.4 percent in 2010.