Something to Celebrate

In May, my youngest graduated from college. Not only that, she got the job she wanted in her field. Break out the champagne — she’s done and on her way. Better still, my wife and I are done with tuition payments.

In my last blog, I talked about the latest 403(b) survey from Plan Sponsor Council of America (PSCA) and some of the positive trends we’re seeing with auto plan provisions, employee contributions and employer match. I’d like to share some more improvements from last year as they also deserve celebration — both now and, hopefully, in the future.

Number of investment options

For the last few years, I’ve pointed out how the number of investment options available to participants keeps going up. Along with that, the number of available options has generally been greater than what an average participant can sort through.

I’ve asked plan advisors to look at this opportunity to help 403(b) plan fiduciaries understand how to put together a reasonable lineup, and really start to pare down the menus.

And it looks like that’s paying off.

  • The average number of funds available for participants to invest their organization contributions is down to 25 from 27.
  • The average number of funds available for participants to invest their own organization contributions is down to 28 from 29.

No, these aren’t huge changes, but they’re a step in the right direction as we typically see these numbers increase from year to year.

Investment policy statements

Several years ago, the results of the PSCA 403(b) plan survey showed too few plans with an investment policy statement. I wrote several articles at the time pointing out the advantages of having an investment policy statement and called on plan advisors to reach out to 403(b) plan fiduciaries and help them implement one.

This year’s survey shows that 56.7 percent of 403(b) plans have investment policy statements. That’s up 25 percent over the past seven years.

Yet another small step in what we see as the right direction.

There’s still more progress to make

Yes, it’s great to celebrate and recognize the progress that’s been made, but there’s still work to do. The number of investment options is still twice what we believe is a manageable number. And over 43 percent of 403(b) plans don’t have an investment policy statement.

I anticipate celebrating milestones with my daughter as she progresses in her career. She may go to graduate school, start a family, etc. Likewise, there’s room for future celebration as we continue to see 403(b) plan progress that can help more and more people work toward retirement readiness.

In addition to blogging here, I also tweet regularly about topics of interest to tax-exempt plans.

Follow me on Twitter: @1aaronfriedman1

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t16091901jh – 10/2016