State(s) of Participation: Where Is Retirement Plan Participation Best?

They say that real estate is all about “location, location, location.” But could location be a factor in retirement plan participation as well?

Apparently so, according to a new report by the Employee Benefit Research Institute (EBRI). It notes that, not only do workers’ demographic characteristics affect the probability of their participation in an employment-based retirement plan, but their geographic location also has an impact.

According to the report, wage and salary workers ages 21–64 living in Florida had the lowest probability (38.3%) of participating in a plan in 2013, while those living in Iowa had the highest probability (56.9%). Iowa workers had the highest probability (66.6%) of participation among full-time, full-year wage and salary workers and among private-sector wage and salary workers ages 21?64 (51.3%), while District of Columbia workers had the highest participation levels for all workers (52.9%).

At the bottom of the rankings, full-time, full-year wage and salary workers in Florida had the lowest probability (45.4%) of participation, while New Mexico workers also had the lowest probability for private-sector wage and salary workers ages 21?64 (31.2%) and for all workers (33.5%). Among public-sector wage and salary workers, Iowa workers had the highest percentage of participation (87.6%), while the lowest level of participation among these public-sector workers was for those living in New Mexico (57.1%).

Despite the overall decline, the likelihood of workers participating in a retirement plan increased from 2002–2013 for four states: Colorado, Washington, West Virginia and the District of Columbia. Mississippi, Virginia, South Carolina and Michigan had the largest increases from 2012 to 2013.

In contrast, Nevada, Michigan, Ohio and Pennsylvania had declines of at least 7 percentage points during this period. 

401(k) Balances

Meanwhile, a new report by Judy Diamond Associates looked at the percentage of all eligible plan participants who had balances in their 401(k) accounts at the end of the 2012 or 2013 plan years in each state (as opposed to the broader retirement plan participation evaluated by EBRI).

According to that report:

• Delaware had the highest participation rate (85.8%), followed by Connecticut (83.1%), Iowa (80.5%), New York (80.0%) and Arkansas (77.5%).
• Nevada had the lowest participation rate (53.0%).

The report notes that nationwide, 71.5% of eligible participants had balances in their 401(k) plans at the end of the most recently available plan year.