BrightScope ranks 'best' 401(k) plans in New York City

Financial firms and law firms play a prominent role in offering the best New York City 401(k) plans, according to BrightScope Inc., a San Diego-based firm that rates DC plans using six broad categories ranging from fees to quality of investment choices.

BrightScope analyzes more than 45,000 plans nationwide using Form 5500 data and other data from sources such as the Census Bureau and the Securities and Exchange Commission, as well as from mutual funds' prospectuses and statements of additional information.

Although BrightScope's analysis includes six categories, the keys to achieving a high score are salary deferrals and corporate matches, said Mike Alfred, a co-founder and chief executive. “Getting more dollars into the plan with a high deferral rate can offset (the impact of) high fees or a poor investment menu,” he said.

The rating includes the size of account balances, participation rates and “company generosity.” The latter is a catch-all term that covers such factors as a plan's vesting schedule and eligibility period. The rating system assigns a number for each plan based on 200-plus data points in the six broad categories, Mr. Alfred said.

A perfect tally is 100. In the U.S., “a handful” of plans have scores of more than 90, Mr. Alfred said.

In New York City, the leader with 86 points was the annuity fund of Local 14-14B International Union of Operating Engineers.

Six of the top 10 rated 401(k) plans are sponsored by companies that have financial industry connections, including the capital accumulation plan at OppenheimerFunds Inc. (tied for second with a score of 84), BlackRock Inc.'s retirement savings plan (tied for third with 83) and the AllianceBernstein LP profit-sharing plan (tied for third with 83).

The law firm of Skadden, Arps, Slate Meagher & Flom's retirement plan tied for second with a score of 84, and the retirement plan for lawyers at Debevoise & Plimpton LLP was fourth with a score of 82.

Mr. Alfred said he wasn't surprised at the preponderance of legal and financial firms among the 401(k) leaders, given the role that legal and financial services play in New York City's economy.

Noting that his firm's rating are primarily based on data from companies' 2007 fiscal years, he said BrightScope will be able to soon provide more up-to-date 401(k) information because the Department of Labor began requiring electronic filing of the Form 5500s for plan years beginning on or after Jan. 1, 2009. “It's been very antiquated,” he said. With electronic filing, “people know the information will be easier to get.”