The number of employees contributing to their 403(b) plans hit a record high last year, according to a survey released by the Plan Sponsor Council of America on Dec. 20.
In 2022, nearly 80% (79.9%) of employees made contributions to the retirement plans of the nonprofits for which they work, up from 79.4% in 2021 and up from 66.4% in 2013.
The increase in 403(b) plan participation contrasts with participation in 401(k) plans, which last year fell to 85.6% from 89.2% in 2021, according to a separate PSCA survey released in November.
"While contribution rates slipped among the private sector in 2022, nonprofit employees and employers maintained or increased plan contributions," said Hattie Greenan, director of research and communications at PSCA, in a news release.
In 2022, nonprofits contributed an average of $6,322 to employee 403(b) accounts, up 30% from $4,887 in 2021. In 2013, nonprofits contributed an average of $3,520 per participating employee.
The PSCA was unable to capture average employee contributions due to a technical issue in the online system it uses, Greenan said.
The use of automatic enrollment among 403(b) plan sponsors also jumped significantly, with 31.4% making automatic enrollment a feature of their plans. That's up from 26.5% in 2021.
Still, 403(b) plans lag 401(k) plans in the use of automatic enrollment. Nearly two-thirds of 401(k) plans (63.9%) use auto enrollment, according to the PSCA's recent 401(k) survey.
More 403(b) plans are also automatically escalating employee contributions over time. In 2022, more than 2 in 3 plans (66.2%) automatically escalated employee contributions, up from 57% in 2021.
The survey, which was sponsored by Hub International and Principal Financial Group, is based on 249 nonprofit organizations that sponsor a 403(b) plan. It was conducted in the summer of 2023.
