Nonprofits with 403(b) plans are seeing a happy trend: higher participant contributions, as a result, higher average account balances.
That's according to the 2015 403(b) Plan Survey from the Plan Sponsor Council of America (PSCA), which also found something really interesting: a big increase in the number of 403(b) plans offering employer contributions—from 82.7 percent in 2013 to 96.6 percent in 2014.
Participants' average account balances increased from $54,600 in 2013 to $62,513 in 2014, with participants putting in an average of 6 percent of their annual pay.
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In 2013, the average annual contribution was 5.8 percent.
The survey also indicated that almost a quarter of 403(b) plan sponsors matched their employees' contributions dollar for dollar on the first 5 or 6 percent employees contributed.
Perhaps surprisingly, one thing that hasn't really improved among 403(b)s is automatic enrollment, which only rose 0.2 percent.
Not that the presence of auto enrollment is all that popular among 403(b)s, anyway; in 2013 only 16 percent of plans incorporated it, and that tiny increase barely moved the needle this year. It certainly doesn't allow 403(b)s to compete with 401(k) plans' use of the feature—that stands at more than 50 percent.
The good news is that, among plans using auto enrollment, sponsors are boosting the default contribution. In 2013, 16.9 percent of plans set the default contribution at 5 percent or higher, but in 2014 20.3 percent of plans had done so.
The survey also revealed another trend: the percentage of plans permitting Roth contributions has more than doubled in the last five years, and currently stands at 25.2 percent of 403(b)s.
Larger organizations are more likely to offer the after-tax option, with half of those made up of 1,000 or more participants offering the Roth feature compared with just 10.9 percent of organizations with fewer than 50 participants. When it was allowed, 10.8 percent of participants seized the opportunity.
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