A new study from the Spectrem Group found that although the majority of most types of 403(b) sponsors report they are somewhat familiar with the new regulations, between one-third and one-half say they are not very or not at all familiar with the new requirements. Sponsors in the Private K-12 segment (61%) and Charitable, Religious, & Other segment (50%) report the least familiarity with new regulations, according to the data.
Across all segments, sponsors say they are most likely to look to a representative of their plan provider for advice on compliance, followed by in-house staff, typically an attorney or financial officer. A small amount of plan sponsors said they would seek help from a third party administrator or benefit consultant, or a state agency or association.
The Spectrem Group found that one-third of sponsors in the Private K-12 and Charitable segments have not yet addressed this issue of new regulations and half or more across all segment are still at the stage of reviewing the regulations in order to determine what will be required of them.
The majority of sponsors across all segments say they are not likely to adopt automatic enrollment in their plans, and 56% of those who say they definitely will not adopt automatic enrollment say they believe the employee should have the choice of enrolling or not. The majority also say they are unlikely to implement a participant advice arrangement, with 52% of those definitely against such arrangement saying the participant is responsible for getting the advice he or she needs.
When considering the impact of the 403(b) regulations, the study found the administrative and compliance demands of the new regulations will result in many sponsors reducing the number of vendors offered to participants. Overall, 15% of all sponsors who currently offer multiple providers say they will definitely decrease the number of choices over the next 12 months, and another 24% say they may do so.
The report, “Not-For-Profit Sector Defined Contribution Plans,” is available for purchase here.