A Fidelity press release said plan sponsors cited concerns about increased fiduciary responsibility (61%), compliance issues (60%), and increased administrative burdens (56%). The new regulations would require 403(b)s to have a written plan document in place and put restrictions on the vendors that could be utilized (See Report: Permanent 403(b) Regs Could be out by Summer).
On the positive side, more than two-thirds of plan sponsors believe the new regulations will help them improve or maintain their ability to monitor investments (69%) and serve employees’ investment needs (73%), according to the release.
John Begley, executive vice president at Fidelity Investments Tax-Exempt Services Company, said in the release, “The good news is that the new regs will encourage plan sponsors to streamline the number of vendors and investment options available in 403(b) plans. By simplifying investment options, sponsors can encourage greater plan participation by addressing the inertia some participants experience when facing too many investment choices.”
Fifty-two percent of sponsors said they are worried about obtaining the information they need to comply with the new regulations. More than 80% intend to rely on their plan vendor for support and guidance.