403 (b) Plan Sponsors: Is Your Plan “Fine”?

My wife and I are about to celebrate our 25th wedding anniversary. Over the course of these 25 years, I have made my share of classic husband-like mistakes. You know the kind I’m talking about — staying out too late with buddies after a good game, spending Saturday on the golf course instead of doing yard work or even giving the classic wrong response to what seemed like an easy, harmless question!

Inevitably, these little mis-steps of mine lead to a day or two of everything being “just fine” around my house. I can feel my wife rolling her eyes at me right now for sharing this, but at the same time, we both knew things were not “just fine.” Over the years, we both smile and laugh at these little things.

Unintentional retirement plan gaps

What about the non-profit plan sponsor who thinks their 403(b) plan is “just fine”? Unlike my wife’s response, where we both knew things were not “fine,” many plan sponsors really do think their plan is fine — without truly knowing what type of retirement gaps might exist in their 403 (b) plans.

If a plan sponsor isn’t aware of gaps, there’s no real incentive to do a full fiduciary review or initiate essential changes to the retirement program.

As a plan fiduciary, it’s important to periodically perform your own due diligence by completing a full fiduciary review. This is where the help of an independent financial advisor can help make a difference.

How does your retirement plan really stack up?

How can you find out if your plan is fine, better than fine or falling short of fine? In other words, how does your current program stack up versus similar organizations?

These questions can help you understand how your plan compares:

  • Is your matching contribution up to the same level as your peers’ plans?
  • Is your participation rate as high as others’?
  • Do you deploy automatic plan features that have become popular in the 401(k) world and are beginning to gain traction with 403(b) plans?
  • Do you still offer 50+ investment options? This likely causes confusion among your own plan participants.

Helping you find answers

These questions and more can be answered by benchmarking your current plan(s). This is where the Principal Financial Group®, along with the Plan Sponsor Council of America (PSCA), can help.

For seven consecutive years, The Principal® and the PSCA have sponsored the only industry-wide 403(b) benchmarking survey. The data in this survey can be used to benchmark your plan directly against other 403(b) plan sponsors’ plans.

As a fiduciary, benchmarking your plan can help educate you as to how your plan stacks up against others. In fact, it may even reassure you that your plan is truly fine or even better than fine.

I don’t think plan sponsors are saying their plan is “fine” when they know things are not fine. Instead, they simply don’t know if the plan is fine or not. Benchmarking your plan is a way to know for sure. Talk with your financial advisor today about how he or she, along with The Principal, can help you answer this question with more confidence!

Affiliation Disclosures

The subject matter in this communication is provided with the understanding that The Principal® is not rendering legal, accounting or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax or accounting obligations and requirements.

Plan Sponsor Council of America is not an affiliate of any company of the Principal Financial Group.

t15121002nr – 12/2015