403(b) Plans Have Some Work to Do

403(b) plan sponsors have just gotten some additional breathing room from regulators – and, according to a recent survey, they’ll need it.

Last week, the Internal Revenue Service (IRS) gave 403(b) plan sponsors an extra year to get their written plan documents in order under new regulations, subject to certain conditions (see IRS Offers Relief for 403(b) Written Plan Requirement).

According to the 2008 403(b) Plan Survey, 41% of 385 respondents say they need to make changes to their 403(b) plan to comply with the new regulations, and just about one-in-ten said they were unsure of their plan’s ERISA status. “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.

The survey, sponsored by the Principal Financial Group, is the first 403(b) benchmarking survey from the Profit Sharing/401k Council of America (PSCA).

According to a press release about the survey – which will be available for purchase early next month, 53.1% of 403(b) plans offer a match of one dollar or more for every dollar employees contribute, compared with just 36.2% of for-profit companies offer the same amount according to PSCA’s 51st Annual Survey of Profit Sharing and 401(k) plans (see PSCA Survey Shows Auto Enroll/Higher Participation Link).

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.