Recordkeepers Dedicated to Serving 403(b) Plans Are Established

Prior to Internal Revenue Service (IRS) regulations passed in 2007, 403(b) plans were very different from 401(k)s, many having multiple vendors (what 403(b) plan sponsors called recordkeepers) as plans were based very much on tax-sheltered annuities and participants engaged individually with annuity providers without plan sponsor oversight. In addition, some plans were exempt from Employee Retirement Income Security Act (ERISA) provisions.

Ten years after the regulations went into effect, 403(b) plans are looking more similar to 401(k)s, but differences still remain. Following the new regulations, recordkeepers had to decide whether they could accommodate the new regulations given the differences in 403(b) plans. Many exited the business.

But now, a new slate of recordkeepers have stepped up to the plate. They have refined their services and systems to accommodate 403(b) plan differences and the different segments that make up the 403(b) plan market—K-12, higher education institutions, health care organizations and churches and charities.

According to PLANSPONSOR’s 2018 Recordkeeping Survey, the top recordkeepers by 403(b) plan assets are TIAA, Fidelity Investments, Transamerica, VALIC and Voya Financial. The top recordkeepers for ERISA 403(b) plans are TIAA, Lincoln Financial Group, Newport Group, VALIC and Principal Financial Group. For non-ERISA plans, the top five are Security Benefit Life, Voya Financial, VALIC, AXA and Fidelity Investments.

This group includes many different names of recordkeepers than those for 401(k) plans, showing certain firms have dedicated themselves to the 403(b) market.