Participation in 403(b) plans isn’t being swayed by adjustments plan executives are making to accommodate new IRS regulations, according to a Profit Sharing/401k Council of America survey.
The PSCA’s 2010 403(b) Plan Survey, which reports on the 2009 plan year of 552 plan sponsors across the U.S., shows that 57% of the 552 plan executives surveyed in 2009 made changes to their 403(b) plans because of the new regulations, compared to 41% in 2007. But the participation rate in the 403(b) plans last year remained at the 75.8% rate reported in 2007.
The regulations, which went into effect in 2009, made the teacher retirement plans more like 401(k) defined contribution plans.
“This year’s 403(b) Plan Survey proves the resilience of the 403(b) system,” PSCA President David Wray said in the news release. “Pre-crash to post-crash, pre-regs to post-regs, 403(b) plan sponsors and participants clearly remain committed to this important employee benefit.”
According to the survey, the number of plans permitting Roth after-tax contributions rose to 13.9% in 2009, from 10.9% in 2007; 76% allowed hardship withdrawals last year, but only 1.3% of participants took them; and 48% of companies with up to 49 employees made changes to their plans in 2009, compared to 70% of plans with 200 or more employees.
Also, a third of survey respondents were unsure whether their plan has an investment policy statement.
The survey was sponsored by the Principal Financial Group. Aaron Friedman, Principal’s national practice leader-non-profit, said in a telephone interview that participant retention was largely the result of the plans’ educational efforts about the plans, and that plans made changes to both comply with IRS regulations and to better attract employees.