PLANSPONSOR - June - July 2022 - 8
UPFRONT
A Look at How 2 Types of DC Plans Differ
FOR-PROFIT and nonprofit organizations
have myriad differences, from the size of
their budget to the culture in their offices.
When it comes to offering retirement plan
benefits, though, the sponsors of either
type of plan share the goal of wanting to
improve the retirement readiness of their
participant population. Nearly all executives
(99%) cited in a March report from
PNC Institutional Asset Management said
they are committed to helping employees
save for retirement; 29% said they are very
committed to that goal.
What follows is a look at how the
main type of defined contribution plan
used by each-401(k) and 403(b), respectively-differ.
Important to note: Not all
403(b) plans are compliant with Employee
Retirement Income Security Act regulations.
That makes it much harder to
gather data or get a full picture of 403(b)
s, as they are not required to file a Form
5500 with the Department of Labor.
For-profit plans are more apt to offer
a match. The PNC study found that forprofit
companies are slightly more likely
to make contributions to their employee
retirement plans (93%) than are nonprofit
organizations (79%). In both types of
plans, the larger it was, the more likely
the plan sponsor was to offer a match on
employee deferrals.
That lower contribution rate on the
403(b) side could reflect several factors, says
Tim Rouse, executive director of SPARK
[Society of Professional Asset Managers
and Recordkeepers] Institute, a trade association
for the retirement plan industry.
One is that, for-profit organizations, by
their nature, may have a larger budget with
which to make such contributions.
Moreover, many 403(b) plan sponsors
also offer other retirement benefits
such as pension plans. " In that case, the
8 PLANSPONSOR.COM June - July 2022 Art by James Yang
pension plan is where the employer is
making the retirement contributions, "
Rouse explains. " And the 403(b) is just a
supplemental
savings
vehicle, whereas
in the 401(k) world, that is the sole retirement
plan for the participant. "
403(b)s typically offer more investments
than do 401(k)s. An April analysis
by the Government Accountability Office
found that ERISA-regulated 403(b) plans
have an average of 32 options, compared
with an average of 21 in 401(k) plans.
One reason 403(b) plans lead here,
Rouse says, is that many began as nonERISA
plans facilitating individual
contracts between providers and participants,
not as group contracts between the
sponsor and provider.
As more 403(b) plan sponsors take on
a larger fiduciary responsibility, over time
they are shedding vendors and offering
a more streamlined investment menu,
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PLANSPONSOR - June - July 2022
Table of Contents for the Digital Edition of PLANSPONSOR - June - July 2022
INSIGHTS
RULES & REGULATIONS
UPFRONT
2022 Plan Sponsor of the Year Winners
By Extension
Talent Management
The Best Line of Defense
Under-the-Radar Plan Errors
FIDUCIARY FORUM
INSIDE ANGLE
PLANSPONSOR - June - July 2022 - Cover1
PLANSPONSOR - June - July 2022 - Cover2
PLANSPONSOR - June - July 2022 - 1
PLANSPONSOR - June - July 2022 - INSIGHTS
PLANSPONSOR - June - July 2022 - 3
PLANSPONSOR - June - July 2022 - RULES & REGULATIONS
PLANSPONSOR - June - July 2022 - 5
PLANSPONSOR - June - July 2022 - 6
PLANSPONSOR - June - July 2022 - 7
PLANSPONSOR - June - July 2022 - UPFRONT
PLANSPONSOR - June - July 2022 - 9
PLANSPONSOR - June - July 2022 - 10
PLANSPONSOR - June - July 2022 - 11
PLANSPONSOR - June - July 2022 - 12
PLANSPONSOR - June - July 2022 - 13
PLANSPONSOR - June - July 2022 - 2022 Plan Sponsor of the Year Winners
PLANSPONSOR - June - July 2022 - 15
PLANSPONSOR - June - July 2022 - 16
PLANSPONSOR - June - July 2022 - 17
PLANSPONSOR - June - July 2022 - 18
PLANSPONSOR - June - July 2022 - 19
PLANSPONSOR - June - July 2022 - 20
PLANSPONSOR - June - July 2022 - 21
PLANSPONSOR - June - July 2022 - 22
PLANSPONSOR - June - July 2022 - 23
PLANSPONSOR - June - July 2022 - 24
PLANSPONSOR - June - July 2022 - 25
PLANSPONSOR - June - July 2022 - 26
PLANSPONSOR - June - July 2022 - 27
PLANSPONSOR - June - July 2022 - By Extension
PLANSPONSOR - June - July 2022 - 29
PLANSPONSOR - June - July 2022 - 30
PLANSPONSOR - June - July 2022 - 31
PLANSPONSOR - June - July 2022 - Talent Management
PLANSPONSOR - June - July 2022 - 33
PLANSPONSOR - June - July 2022 - The Best Line of Defense
PLANSPONSOR - June - July 2022 - 35
PLANSPONSOR - June - July 2022 - Under-the-Radar Plan Errors
PLANSPONSOR - June - July 2022 - 37
PLANSPONSOR - June - July 2022 - FIDUCIARY FORUM
PLANSPONSOR - June - July 2022 - 39
PLANSPONSOR - June - July 2022 - INSIDE ANGLE
PLANSPONSOR - June - July 2022 - Cover3
PLANSPONSOR - June - July 2022 - Cover4
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