2021
Recordkeeping Survey
Industry Snapshot
403(b) Plans
The first consideration when conducting a request for proposals (RFP) for a 403(b) plan is which type of these plans is being offered to employees—often determined by the employer’s industry—and whether it will be served by multiple vendors or one, advises Brian O’Keefe of PLANSPONSOR. Multi-vendor environments have a different RFP process than does a traditional one-vendor environment.
Prior to IRS regulations passed in 2007, 403(b) plans varied considerably from 401(k)s. Many of the former used numerous vendors—what 403(b) plan sponsors called recordkeepers—as plans were substantially based on tax-sheltered annuities, and participants engaged individually with the annuity providers without plan sponsor oversight. In addition, some plans were exempt from Employee Retirement Income Security Act (ERISA) provisions.
In the 10 years since the regulations took effect, 403(b) plans have come to look increasingly like 401(k)s, although differences remain. With the new regulations, recordkeepers had to decide whether they could ensure compliance with the rules concerning each plan type. Many of these vendors exited the business.
Assuming the RFP is for a single-provider 403(b) platform, the questions vary little from 401(k) plan RFPs, says Jon Chambers of SageView Advisory Group. Still, “We are careful in the general profiling questions to ensure that the number of 403(b) plans and participants supported [by the candidate] is meaningful.
“There’s considerable overlap between 401(k) and 403(b) providers,” he continues, “but the markets aren’t identical—some 401(k) providers are strong in the 403(b) market; others aren’t. And some 403(b) providers have very little 401(k) presence. We typically help clients select the right set of candidate firms to receive the RFP by framing prospective vendors’ capabilities and target markets, to avoid a 403(b) plan sponsor selecting a vendor whose primary depth is in 401(k)—or vice versa.” —PS
Total assets
Total plans
Total participants
194,349
17,887,994
$1,161B
Total assets
Total plans
Total participants
194,349
17,887,994
$1,161B
Total assets
Total plans
Total participants
194,349
17,887,994
$1,161B
Total assets
Total plans
Total participants
194,349
17,887,994
$1,161B
