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403(b) Plans Progressing Despite Shaky Economy

New survey from the Plan Sponsor Council of America confirms employer’s enduring commitments to 403(b)s


David Wray

In the face of prolonged economic instability, 403(b) plan sponsors are forging ahead with a variety of plan improvements—such as increased use of automatic enrollment, greater participant education, refined investment lineups and more. Consequently, many plans also reported higher participation rates. 

These and other insights are revealed in the latest 403(b) plan sponsor survey from the Plan Sponsor Council of America (PSCA). The survey, which is sponsored by the Principal Financial Group®, illustrates 403(b) plan sponsors’ dedication to their plans—and their employees—in good times and bad. 

“The survey shows that the 403(b) system is actually improving during this volatile period,” says David Wray, president, PSCA. “Employers are following through on their commitments to their employees, and employees are responding.”

Highlights of the 403(b) plan sponsor survey results include:

  • More automatic enrollment. Just over 10 percent of respondents added automatic enrollment in the last year compared to eight percent of 401(k) plans that added automatic enrollment.
  • Increased participant education. More than half of organizations increased their employee education efforts, with nearly one-quarter providing education specifically on market volatility.
  • A boost in matching contributions. Just over 16 percent of organizations either increased or restored their matching contributions in the past year. Nearly 40 percent of organizations that suspended or reduced their match during the last four years have now restored it to previous levels.
  • Refinements to investment lineups. More than 30 percent of organizations changed the investment lineup in the last year, including nearly 65 percent of organizations with 1,000 or more participants.
  • Increased participation rates. Nearly 45 percent of respondents indicated an increase in participation, up from 38 percent reporting an increase the previous year.

The survey also gives insight into plan sponsors’ evolving awareness of their ERISA status. Compared to the previous survey, fewer plan sponsors identify their plans as non-ERISA plans, and more are uncertain of their plan’s ERISA status. Larger 403(b) plans are converting to ERISA status at twice the overall rate. 

Overall, the progress of 403(b) plans mirrors that of 401(k) plans. “The survey shows that 403(b) plan sponsors are marching to the same drummer as their 401(k) counterparts—particularly among the largest 403(b) plans,” says Aaron Friedman, national non-profit practice leader, The Principal®. “Sponsors of smaller 403(b) plans are also progressing in the same way as 401(k) plan sponsors, but at a slower rate than larger 403(b) plans.”

Friedman said four times as many of the largest 403(b) plans changed investment lineups and more than twice as many of the larger plans increased education than the smallest 403(b)s. Full survey results are available at

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The Plan Sponsor Council of America (PSCA), a national, non-profit association of 1,200 companies and their six million employees, advocates increased retirement security through profit sharing, 401(k), and related defined contribution programs to federal policymakers. PSCA makes practical assistance available to its members with profit sharing and 401(k) plan design, administration, investment, compliance, and communication materials. PSCA, established in 1947, is based on the principle that “defined contribution partnership in the workplace fits today’s reality.” PSCA's services are tailored to meet the needs of both large and small companies with members ranging in size from Fortune 100 firms to small, entrepreneurial businesses.