First 403(b) Plan Benchmarking Survey Released
New Survey from Profit Sharing/401k Council of America Offers Much-Needed Insight on 403(b) Plan Design
(Des Moines, Iowa) — Employee benefits such as 403(b) retirement plans play a key role in the not-for-profit world. Many not-for-profit organizations rely heavily on 403(b) plans—instead of salaries—to compete for the best employees. Until now, however, there has been very little data available to help these groups benchmark their plans against other not-for-profits.
That has changed with the release of the first 403(b) benchmarking survey from the Profit Sharing/401k Council of America (PSCA). Sponsored by the Principal Financial Group®, the survey reports on the 2007 plan year experience of 385 403(b) plans from across the country.
“PSCA continues its mission to provide unbiased best-practices information to defined contribution plan sponsors. We're pleased to assist 403(b) plan sponsors by filling the gap in available benchmarking data,” says David Wray, president of PSCA.
“In light of the final 403(b) regulations, plan design is a key concern for 403(b) plan sponsors,” says Aaron Friedman, national practice leader—non-profit, The Principal®.
“In the past, not-for-profits had to benchmark their plans against 401(k) data. That's not really an apples-to-apples comparison. The 2008 403(b) Plan Survey allows not-for-profit organizations—and the financial professionals who advise them—to make an apples-to-apples comparison of many different plan design options,” Friedman says.
Specifically, 403(b) plan sponsors can use the survey results to benchmark:
- The type and frequency of their employer match
- Their participation rate by industry and by plan size
- The number of investment funds offered
- Service requirements for participation
- The number of plans offering Roth and catch-up contributions
Survey reveals progress (but some confusion) on new regulations
According to the 2008 403(b) Plan Survey, 41 percent of respondents say they need to make changes to their 403(b) plan to comply with the new regulations. “This presents an opportunity for financial professionals, who can help their clients comply with the new regulations,” Friedman explains.
In addition, the survey shows that 10.9 percent of respondents are unsure of their plan's ERISA status. “This presents a unique challenge with 403(b) plans,” says Friedman. “Especially in light of changing Form 5500 and audit requirements, financial professionals will need to help their clients sort through this.”
Survey shows surprising differences between 403(b), 401(k) plans
The 2008 403(b) Plan Survey allows some direct comparisons between data on 403(b) plans and 401(k) plans, using PSCA's 51st Annual Survey of Profit Sharing and 401(k) Plans. The data reveal striking differences between 403(b) and 401(k) plans, especially in the employer match.
For example, 53.1 percent of 403(b) plans offer a generous match of one dollar or more for every dollar employees contribute. Only 36.2 percent of for-profit companies offer the same amount according to PSCA's 51st Annual Survey of Profit Sharing and 401(k) plans.
PSCA's 2008 403(b) Plan Survey will be available for purchase in early January for $145 for PSCA members and $375 for non-members. Surveys may be pre-ordered now at www.psca.org.
About PSCA
Established in 1947, the Profit Sharing/401k Council of America (PSCA) is a national, non-profit association of 1,200 companies and their six million plan participants. PSCA represents its members' interests to federal policymakers and offers practical, cost-effective assistance with profit sharing and 401(k) plan design, administration, investment, compliance, and communication. PSCA's services are tailored to meet the needs of both large and small companies. Members range in size from Fortune 100 firms to small, entrepreneurial businesses.
About the Principal Financial Group
The Principal Financial Group® (The Principal®)[1]is a leader in offering businesses, individuals and institutional clients a wide range of financial products and services, including retirement and investment services, life and health insurance, and banking through its diverse family of financial services companies. A member of the Fortune 500, the Principal Financial Group has $287.4 billion in assets under management[2] and serves some 19.0 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com.
- [1]
- "The Principal Financial Group" and “The Principal” are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.
- [2]
- As of September 30, 2008
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