How to Find Ratings and Information for Your 401(k) Plan

I came across a new online resource this week for finding information and ratings about employer 401(k) plans.  The site is BrightScope.  Apparently, the publisher of BrightScope has accessed company 401k records from the Department of Labor, the Securities and Exchange Commission, the U.S. Census Bureau, the Equal Employment Opportunity Commission, and the Bureau of Labor Statistics.

These agencies maintain publicly available databases of information about 401(k) plans sponsored by thousands of businesses around the U.S.  Information about every company plan is not available.  (Mine wasn’t.)  Although BrightScope recognized that my plan existed, it didn’t have any information about it.  I believe that is because my employer’s plan is managed by a separate entity that manages hundreds of other 401(k) plans in the same industry.

BrightScope takes the plan information that it accesses, including investment options and fees, and runs that data through its own ratings algorithms.  This is how it describes its ratings system:

The BrightScope rating algorithm calculates a single numerical score for each 401k plan in the country after considering over 200+ individual data points in broad categories such as total plan cost, company generosity and investment menu quality. 

Incidentally, if your employer’s plan is not in the BrightScope database, you can submit it to get it rated.

I think the BrightScope rating system has some merit in that it might encourage employers with poorly rated plans to examine options for improving it.

These are the blog Carnivals that my writing appeared in this week:

Carnival of Personal Finance

Money Hacks Carnival

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