May 11, 2010
--- Despite having to comply with a new set of regulations during one of the worst economic downturns, the 403(b) plan market appears to be healthier than ever, according to a new survey. ---
The 2010 403(b) Plan Survey from the Profit Sharing/401k Council of America (PSCA) indicated that plan sponsors are adjusting well to the new regulations imposed by the IRS, and that participation and account balances remain high.
Sponsored by the Principal Financial Group, the study showed that 56.8% of plan sponsors made changes to their plans because of new regulations—more than the 41% that had planned to make changes according to the 2008 403(b) Plan Survey. Fewer small companies made changes as a result of the new rules than large companies (just 48.3% of plans with one to 49 employees made changes versus nearly 70% of plans with 200 or more employees).
The survey also revealed that the overall participation rate for employees eligible to participate in a 403(b) plan remained unchanged from the 2008 survey at 75.8%. The average account balance for active plan participants is $71,879.
In addition, few participants (1.3%) took hardship withdrawals in 2009, even though 76% of plans permit them.
However, some confusion still exists as the survey found one-third of respondents are unsure if their plan has an investment policy statement, 7.1% of respondents are unsure of their plan’s ERISA status, and 3.7% are unsure if they file a Form 5500.
Three-quarters (75%) of plans that participated in the survey are ERISA, and 77.5% stated that they file a Form 5000. For 35.5% of organizations that file a Form 5500, the form is prepared by the plan’s recordkeeper, and 33.9% of organizations prepare the Form 5500 themselves.