Data and Research July 6, 2018

NQDC Plan Recordkeeping Market Now a Blend of Expertise and Administration

The market has become more blended, with the emergence of “hybrid” organizations capable of delivering on both deep NQDC-specific expertise and plan administration, the 2018 PLANSPONSOR Recordkeeping Survey finds.
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Prior to 2008, plan sponsors could find one of two types of providers in the nonqualified deferred compensation (NQDC) market: specialists, that offer deep NQDC-specific expertise, and generalists, that offer NQDC administration as a convenient add-on to their qualified plan business.

Since then, the market has become more blended, with the emergence of “hybrid” organizations capable of delivering on both value propositions. Today, the market is almost evenly split, with hybrid organizations totaling more assets/participants and specialists retaining more plans, which may explain why only 10% of the overall market bundles NQDC plans with other services.

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According to the 2018 PLANSPONSOR Recordkeeping Survey, the top five NQDC plan providers by number of participants are Fidelity Investments, Transamerica, Newport Group, Prudential Retirement and Alight Solutions (formerly part of Aon). The top five by total number of Section 409A NQDC plans are The Pangburn Group, NFP, Fidelity Investments, Newport Group and Prudential Retirement.

“Although they are small, NQDC plans can be an important but complex benefit for high-income employees/executives, so finding a provider capable of delivering the right combination of knowledge, administration, funding strategies and participant education is no less important than decisions related to larger, more common plan types,” says Brian O’Keefe, director – Research and Surveys, PLANSPONSOR/PLANADVISER.
Data and Research July 2, 2018

Recordkeepers Dedicated to Serving 403(b) Plans Are Established

Following IRS regulations for 403(b) plans passed in 2007, many vendors (recordkeepers) exited the business.
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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.

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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.

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