Despite a potentially crushing recession and a spate of complex new regulations, the 403(b) retirement plan system appears to be healthier than ever. That’s the finding from a survey released last week from the Profit Sharing/401k Council of America (PSCA), a non-profit association of companies that sponsor defined contribution plans for employees.
The 2010 403(b) Plan Survey results indicate plan sponsors are adjusting well to the new regulations imposed by the IRS –and that participation and retirement account balances remain high.
The study shows that nearly 57% of plan sponsors made changes to their 403(b) plans because of new regulations. That is a higher percentage than had planned to make changes (41%) in a similar survey conducted in 2008.
The survey also found overall participation rates for employees eligible to participate in a 403(b) plan remained unchanged from the 2008 survey at 75.8%.
“This year’s 403(b) Plan Survey proves the resilience of the 403(b) system,” says David Wray, president of PSCA, in a prepared statement. “Pre-crash to post-crash, pre-regs to post-regs, 403(b) plan sponsors and participants clearly remain committed to this important employee benefit.”
The ongoing series of PSCA surveys on 403(b) plans reports on the 2009 plan-year experience of 552 plan sponsors from across the country. This represents a 43% increase in the number of respondents from the 2008 403(b) Plan Survey.
The survey also revealed:
? An increase in the number of plans permitting Roth after-tax contributions (13.9% in 2009, up from 10.9% in 2007)
? Few participants (1.3%) took hardship withdrawals in 2009 even though 76% of plans permit them
? Fewer small companies made changes as a result of the new rules than large companies (just over 48% of plans with 1-49 employees made changes vs. nearly 70% of plans with 200 or more employees)
? One-third of respondents are unsure if their plan has an investment policy statement
John Sullivan is editor-in-chief of Boomer Market Advisor and AdvisorBiz.com, part of Summit Business Media’s Advisor Media Group.