More nonprofit workers are now eligible to participate in their organizations’ retirement plans than ever before, according to the Plan Sponsor Council of America’s latest annual 403(b) Plan Survey released Nov. 14.
In 2023, nine in 10 nonprofit workers were eligible to participate in their employer’s 403(b) plan, the highest eligibility level in the survey’s 16-year history.
The reason for the increased eligibility is likely due to provisions in the SECURE Act and SECURE 2.0 Act requiring employers to allow long-term, part-time workers to participate in their employers’ retirement plans, PSCA said in a news release.
In addition to making their plans more broadly available to employees, nonprofit employers also made them more flexible by adding optional provisions in SECURE 2.0 that allowed workers to withdraw money from their 403(b) retirement accounts for special reasons. Nearly seven in 10 (68.4%) now allow distributions for natural disasters, 60% for terminal illness and 48.4% for emergency withdrawals of $1,000 annually.
“Allowing more employees to participate in the plan, along with more flexibility for participants to access their funds in emergencies, will increase the financial security of nonprofit workers in the long run,” said Hattie Greenan, PSCA’s director of research and communications, in the news release.
Despite the improvements, participation in 403(b) plans was down from previous years. In 2023, 73.7% of nonprofit employees made contributions to their plans, down from 79.9% in 2022 and 79.4% in 2021.
The survey is based on 323 nonprofit organizations that currently sponsor a 403(b) plan for their employees. It was conducted over the summer and sponsored by Mutual of America Financial Group.
