Top 10 industries with the best-performing 401(k) plans

1. Certified Public Accountants

The CPA segment placed first for the second year running. The 8,177 companies saw average balances fall 22%, to $113,193.

Employee contributions per participant fell by $889, or 10%, while employer contributions fell 19%. The number of workers covered by this industry fell about 2% from about 518,000 to 509,000.

CPAs placed in the top five on every one of the seven metrics of plan performance tracked, placing first in both account balance and participation rate, second in both employee contributions and plan score, and fourth in both employer contributions and employee longevity.

This strength, according ot the report, is partly due to the fact that CPAs work in an "extremely bottom-heavy industry," with 53% of firms having 10 or fewer employees. Smaller firms tend to offer more generous plans, if for no other reason than that the owner of the company represents a bigger percentage of the participants.

Credit: Shutterstock

10. Mining, utilities and energy

This year, the mining, utilities and energy segment rose by one place, just edging into the top 10 after missing the cut in 2023.

According to Judy Diamond, the approximately 4,800 companies examined saw a 23% decline in average account balance, to $60,206. On the positive side, employee contributions per participant rose by $91, or about 2%, compared with the previous plan year.

Employer contributions per participant were down by 14%, but the number of workers covered by this industry grew from about 1.39 million to 1.47 million, up about 6% year over year.

One metric on which the segment outperformed its overall rank was on investment returns seen in 2022, with an average return of negative 16.25% getting the No. 7 spot. While sharply down, the segment did not see as dramatic a negative return as plans in other sectors.

Credit: Adobe Stock

9. Other financial and insurance services

The "other" financial services segment fell two places this year to ninth out of 27 industry groupings.

The 7,168 companies in the segment saw a 22% decline in average account balance, to $66,858. Employee contributions per participant fell by $602, or about 7% compared with the previous plan year. Employer contributions per participant were also down by 30%.

The number of workers covered by this industry grew from about 1.22 million to 1.43 million, approximately a 16% year over year growth rate. This is by a large margin the highest growth rate of any of the industries surveyed.

By enrolling 200,000 net new plan participants, the average account balance, longevity and plan score metrics all dipped from their 2021 levels. The analysts expect this segment to recover to the 6th or 7th position next year.

Credit: Shutterstock

8. Engineering

The engineering segment fell two places this year.

The 9,421 companies saw a 21% decline in average account balance, to $80,504. Employee contributions per participant fell by $470, or about 7% from the previous plan year. Employer contributions per participant were down 17%.

The number of workers covered by this industry shrank from about 970,000 to 930,000, approximately a 5% year-over-year decline. Only five other industries saw a greater percentage of contraction.

According to Judy Diamond, the relative strength of engineering plans remains largely unchanged year over year. In six of the seven metrics, engineers finished in the top 10, but they were sharply penalized for coming in 24th of 27 on rate of return (negative 17.03%).

Engineers continue to see strong contributions and account balances.

Credit: Shutterstock

7. Insurance providers and brokers

This segment dropped three places this year.

The 12,539 companies saw a 23% decline in average account balance, to $72,515. Employee contributions per participant fell by $346, declining about 6%. Employer contributions per participant were similarly down 17%.

The covered worker population of 2.35 million was "remarkably flat," according to Judy Diamond, declining only about 0.1%.

On close examination, this industry grouping did not fall in the rankings because of any deficit in plan design, administration or performance. Those metrics were stable year over year. Rather, its decline in rank is more a testament to how some other industries managed to improve their own situation.

Credit: Adobe Stock

6. Financial advice and investment activities

This segment fell four places this year.

The 12,873 companies saw a 26% decline in average account balance, to $98,217. Employee contributions per participant fell by $894, or about 8%.. Employer contributions per participant were down by 29%.

The number of workers covered by this industry grew from about 747,000 to 837,000, a growth rate of about 12%. This is the second highest growth rate of all industry groupings.

According to Judy Diamond, the fact that this group fell from second to sixth in a year is explained almost entirely by the fact that it added 90,000 net new 401(k)-eligible workers. When "new bodies" come in, average account balances go down.

Credit: Adobe Stock

5. Banking

The banking segment rose five places this year, one of the biggest yearly jumps Judy Diamond has measured in its 401(k) plan benchmarking effort.

The 6,412 companies saw a 16% decline in average account balance, to $71,708. This is an impressive feat given the nearly 20% slide in the S&P 500 over the same period.

The segment benefited from the relative strength of its rate of return (-15.21%) compared with the S&P, as well as its employee longevity of 11.2 years, which were good enough for first and second place respectively. Interestingly, banks went from worst to first on their rate of return. This can likely be attributed to an asset allocation strategy that tends to be more conservative.

Credit: Adobe Stock

4. Dentists

The dentist segment rose a single position this year.

The 31,480 companies saw a 25% decline in average account balance, to $80,265. Employee contributions per participant fell by $712, or about 12%.

Employer contributions per participant were also down by 20%, while the number of workers covered increased from about 451,000 to 473,000. It's notable that this growth took place even as the total number of plan sponsors declined by 1,451, according to Judy Diamond. This suggests that individual practices may have merged.

With 58% of all dentists' plans in the 1- to 10-employee range and 92% with 25 workers or fewer, it's clear that the small, independent practice is still the primary business approach.

Credit: Shutterstock

3. Lawyers and legal services

The legal segment once again placed third. The 30,647 companies saw a 21% decline in average account balance, to $112,950.

Employee contributions per participant fell by $1,217, or about 15%. Employer contributions per participant were down by 28%.

As the Judy Diamond report notes, lawyers have a lot of money in these plans, so while the actual dollar numbers here are larger, the percentage declines aren't.

"Whenever we talk about lawyers it's always worth bringing up two very important points," the report says. "The first is that this industry is unique in that many of the lawyers are also participating in their firm's defined benefit pension plans. The second is that this industry … is extremely bottom heavy, with 1-to-10 person firms making up a full 53% of plan sponsors."

Credit: Adobe Stock

2. Physicians

Like the legal segment, the physicians segment landed in the same place in this year's ranking. The 36,744 companies saw a 20% decline in average account balance, to $113,193.

Employee contributions per participant fell by $979, or about 16% from the previous plan year. Employer contributions per participant were down by 35%, by far the largest margin of decline of any of the 27 industries surveyed. The number of workers covered by this industry also declined substantially, from about 1.59 million to 1.48 million — approximately 7%.

Even with the large percentage decrease in employer contributions noted above, physicians are still contributing more per person than anyone except financial advisors.

As with CPAs, dentists and lawyers, this category is bottom heavy, with 71% of plans having fewer than 25 participants.

Credit: Shutterstock

1. Certified Public Accountants

The CPA segment placed first for the second year running. The 8,177 companies saw average balances fall 22%, to $113,193.

Employee contributions per participant fell by $889, or 10%, while employer contributions fell 19%. The number of workers covered by this industry fell about 2% from about 518,000 to 509,000.

CPAs placed in the top five on every one of the seven metrics of plan performance tracked, placing first in both account balance and participation rate, second in both employee contributions and plan score, and fourth in both employer contributions and employee longevity.

This strength, according ot the report, is partly due to the fact that CPAs work in an "extremely bottom-heavy industry," with 53% of firms having 10 or fewer employees. Smaller firms tend to offer more generous plans, if for no other reason than that the owner of the company represents a bigger percentage of the participants.

Credit: Shutterstock

10. Mining, utilities and energy

This year, the mining, utilities and energy segment rose by one place, just edging into the top 10 after missing the cut in 2023.

According to Judy Diamond, the approximately 4,800 companies examined saw a 23% decline in average account balance, to $60,206. On the positive side, employee contributions per participant rose by $91, or about 2%, compared with the previous plan year.

Employer contributions per participant were down by 14%, but the number of workers covered by this industry grew from about 1.39 million to 1.47 million, up about 6% year over year.

One metric on which the segment outperformed its overall rank was on investment returns seen in 2022, with an average return of negative 16.25% getting the No. 7 spot. While sharply down, the segment did not see as dramatic a negative return as plans in other sectors.

Credit: Adobe Stock

9. Other financial and insurance services

The "other" financial services segment fell two places this year to ninth out of 27 industry groupings.

The 7,168 companies in the segment saw a 22% decline in average account balance, to $66,858. Employee contributions per participant fell by $602, or about 7% compared with the previous plan year. Employer contributions per participant were also down by 30%.

The number of workers covered by this industry grew from about 1.22 million to 1.43 million, approximately a 16% year over year growth rate. This is by a large margin the highest growth rate of any of the industries surveyed.

By enrolling 200,000 net new plan participants, the average account balance, longevity and plan score metrics all dipped from their 2021 levels. The analysts expect this segment to recover to the 6th or 7th position next year.

Credit: Shutterstock

8. Engineering

The engineering segment fell two places this year.

The 9,421 companies saw a 21% decline in average account balance, to $80,504. Employee contributions per participant fell by $470, or about 7% from the previous plan year. Employer contributions per participant were down 17%.

The number of workers covered by this industry shrank from about 970,000 to 930,000, approximately a 5% year-over-year decline. Only five other industries saw a greater percentage of contraction.

According to Judy Diamond, the relative strength of engineering plans remains largely unchanged year over year. In six of the seven metrics, engineers finished in the top 10, but they were sharply penalized for coming in 24th of 27 on rate of return (negative 17.03%).

Engineers continue to see strong contributions and account balances.

Credit: Shutterstock

7. Insurance providers and brokers

This segment dropped three places this year.

The 12,539 companies saw a 23% decline in average account balance, to $72,515. Employee contributions per participant fell by $346, declining about 6%. Employer contributions per participant were similarly down 17%.

The covered worker population of 2.35 million was "remarkably flat," according to Judy Diamond, declining only about 0.1%.

On close examination, this industry grouping did not fall in the rankings because of any deficit in plan design, administration or performance. Those metrics were stable year over year. Rather, its decline in rank is more a testament to how some other industries managed to improve their own situation.

Credit: Adobe Stock

6. Financial advice and investment activities

This segment fell four places this year.

The 12,873 companies saw a 26% decline in average account balance, to $98,217. Employee contributions per participant fell by $894, or about 8%.. Employer contributions per participant were down by 29%.

The number of workers covered by this industry grew from about 747,000 to 837,000, a growth rate of about 12%. This is the second highest growth rate of all industry groupings.

According to Judy Diamond, the fact that this group fell from second to sixth in a year is explained almost entirely by the fact that it added 90,000 net new 401(k)-eligible workers. When "new bodies" come in, average account balances go down.

Credit: Adobe Stock

5. Banking

The banking segment rose five places this year, one of the biggest yearly jumps Judy Diamond has measured in its 401(k) plan benchmarking effort.

The 6,412 companies saw a 16% decline in average account balance, to $71,708. This is an impressive feat given the nearly 20% slide in the S&P 500 over the same period.

The segment benefited from the relative strength of its rate of return (-15.21%) compared with the S&P, as well as its employee longevity of 11.2 years, which were good enough for first and second place respectively. Interestingly, banks went from worst to first on their rate of return. This can likely be attributed to an asset allocation strategy that tends to be more conservative.

Credit: Adobe Stock

4. Dentists

The dentist segment rose a single position this year.

The 31,480 companies saw a 25% decline in average account balance, to $80,265. Employee contributions per participant fell by $712, or about 12%.

Employer contributions per participant were also down by 20%, while the number of workers covered increased from about 451,000 to 473,000. It's notable that this growth took place even as the total number of plan sponsors declined by 1,451, according to Judy Diamond. This suggests that individual practices may have merged.

With 58% of all dentists' plans in the 1- to 10-employee range and 92% with 25 workers or fewer, it's clear that the small, independent practice is still the primary business approach.

Credit: Shutterstock

3. Lawyers and legal services

The legal segment once again placed third. The 30,647 companies saw a 21% decline in average account balance, to $112,950.

Employee contributions per participant fell by $1,217, or about 15%. Employer contributions per participant were down by 28%.

As the Judy Diamond report notes, lawyers have a lot of money in these plans, so while the actual dollar numbers here are larger, the percentage declines aren't.

"Whenever we talk about lawyers it's always worth bringing up two very important points," the report says. "The first is that this industry is unique in that many of the lawyers are also participating in their firm's defined benefit pension plans. The second is that this industry … is extremely bottom heavy, with 1-to-10 person firms making up a full 53% of plan sponsors."

Credit: Adobe Stock

2. Physicians

Like the legal segment, the physicians segment landed in the same place in this year's ranking. The 36,744 companies saw a 20% decline in average account balance, to $113,193.

Employee contributions per participant fell by $979, or about 16% from the previous plan year. Employer contributions per participant were down by 35%, by far the largest margin of decline of any of the 27 industries surveyed. The number of workers covered by this industry also declined substantially, from about 1.59 million to 1.48 million — approximately 7%.

Even with the large percentage decrease in employer contributions noted above, physicians are still contributing more per person than anyone except financial advisors.

As with CPAs, dentists and lawyers, this category is bottom heavy, with 71% of plans having fewer than 25 participants.

Credit: Shutterstock

1. Certified Public Accountants

The CPA segment placed first for the second year running. The 8,177 companies saw average balances fall 22%, to $113,193.

Employee contributions per participant fell by $889, or 10%, while employer contributions fell 19%. The number of workers covered by this industry fell about 2% from about 518,000 to 509,000.

CPAs placed in the top five on every one of the seven metrics of plan performance tracked, placing first in both account balance and participation rate, second in both employee contributions and plan score, and fourth in both employer contributions and employee longevity.

This strength, according ot the report, is partly due to the fact that CPAs work in an "extremely bottom-heavy industry," with 53% of firms having 10 or fewer employees. Smaller firms tend to offer more generous plans, if for no other reason than that the owner of the company represents a bigger percentage of the participants.

Credit: Shutterstock

Instant Insights /

Top 10 industries with the best-performing 401(k) plans

1. Certified Public Accountants

10. Mining, utilities and energy

9. Other financial and insurance services

8. Engineering

Advertisement

7. Insurance providers and brokers

6. Financial advice and investment activities

5. Banking

4. Dentists

3. Lawyers and legal services

Advertisement

2. Physicians

1. Certified Public Accountants

10. Mining, utilities and energy

9. Other financial and insurance services

8. Engineering

Advertisement

7. Insurance providers and brokers

6. Financial advice and investment activities

5. Banking

4. Dentists

3. Lawyers and legal services

Advertisement

2. Physicians

1. Certified Public Accountants

Related: Top 10 industries with the best-performing 401(k) plans

1 Elevance sues medical services firms over 'fraudulent' out-of-network care billing

2 UnitedHealth moves pricey Stelara off standard commercial drug plan formularies

3 A patient’s genes may affect which GLP-1 obesity drugs work best, researchers say

4 Cigna hit with 2nd suit alleging misuse of 401(k) forfeitures, now matching UnitedHealth’s 2 suits

5 DOL secretary talks about self-insured employer plans and PBM regulation at House hearing

40% of workers say more frequent pay helps manage bills, study finds

New Maine law would require employers with 3+ workers to enroll in state auto-IRA program

Retirement industry group asks IRS to include SECURE 2.0, forfeiture rules in new Guidance Plan

Instant Insights /

Top 10 industries with the best-performing 401(k) plans

Related: Top 10 industries with the best-performing 401(k) plans

John Manganaro

Trending Stories

1 Elevance sues medical services firms over 'fraudulent' out-of-network care billing

2 UnitedHealth moves pricey Stelara off standard commercial drug plan formularies

3 A patient’s genes may affect which GLP-1 obesity drugs work best, researchers say

4 Cigna hit with 2nd suit alleging misuse of 401(k) forfeitures, now matching UnitedHealth’s 2 suits

5 DOL secretary talks about self-insured employer plans and PBM regulation at House hearing

Events

Recommended Stories

40% of workers say more frequent pay helps manage bills, study finds

New Maine law would require employers with 3+ workers to enroll in state auto-IRA program

Retirement industry group asks IRS to include SECURE 2.0, forfeiture rules in new Guidance Plan

Resource Center