Health Care Orgs Hire Advisers, Change Plan
Designs
October 26, 2009 (PLANSPONSOR.com) - The new 403(b)
regulations and the recent market volatility, combined with
heightened fiduciary concerns, led more health care
organization retirement plan sponsors to retain a retirement
plan adviser, according to a survey conducted by Diversified
Investment Advisors and the American Hospital Association
(AHA).
A press release said three-quarters of survey
respondents reported they now have a plan adviser. In
addition, 21% of plan sponsors consolidated the number of
vendors used in their 403(b) plans and 20% converted to a
single vendor arrangement.
More plan sponsors are outsourcing the administration of
plan loans (53%), hardship withdrawals (45%) and QDROs
(42%). More than one-third (37%) said that implementing a
new fiduciary process associated with the new 403(b)
regulations was their primary challenge.
The survey found health care plan sponsors maintain
multiple defined contribution plans. Seventy-seven percent
of survey respondents offer a 403(b) plan - the most
prevalent DC plan offered; 62% offer a 457(b) plan; and 41%
offer a 401(k) plan. Eleven percent of respondents
currently offer a Roth 403(b) plan - a three percentage
point increase from last year, the number of plan sponsors
offering a 401(a) plan increased to 31% from 25% in
2008.
Despite the economic challenges of the past year, and
organizations' efforts to cut costs, plan sponsors
eliminating (4%) or reducing (8%) the employer contribution
to their defined contribution plans are in the minority,
according to the press release. Contribution rates among
participants experienced only a modest decline in the last
year, and the survey found a one percentage point decrease
in the salary deferral rate among highly compensated
employees since last year.
There was only a modest decline in participation
rates across all defined contribution plans - 68% now
versus 70% a year ago. Only 7% of participants have
outstanding loans, and outstanding loan balances
decreased for the second consecutive year. The median
loan balance is $3,834 among survey participants.