For retirement plan advisors, there’s a silver lining in the dark cloud hanging over public sector DB pension plans: new opportunities in the 403(b) defined contribution market. The pressure being put on public employees’ DB plans has led to “a need to increase both participation rates and contribution rates” in 403(b) plans, Chris DeGrassi, executive director of the National Tax Sheltered Accounts Association (NTSAA), told BenefitsPro in a recent story on the topic. “The demand for investment professionals to engage in and assist in this market has never been higher,” says DeGrassi.
To be sure, the 403(b) world is very different from the 401(k) world — with minimal involvement on the part of plan sponsors, there’s no employer match, auto enrollment or auto escalation, for example; and since most are non-ERISA plans, they’re not subject to Form 5500 filing, testing, fiduciary or fee disclosure rules. Nonetheless, many employers with non-ERISA plans have adopted best practices from the 401(k) world over the years — including compliance requirements from ERISA and the tax code (believe it or not). And currently, because of the increasing popularity of alternatives, advisors in the 403(b) space are helping plan sponsors put together more custom portfolios. These dynamics have boosted the demand for advisors with 401(k) experience.
