Stanford University Makes 403(b) Plan Changes

The changes, announced in a February letter by Diane Peck, vice president of human resources, include a paring down of the number of investment options participants have from nearly 300 to five, according to Stanford University News. At the same time, however, it allows access to a greater number of investment funds through a new brokerage option for those more experienced investors who are open to greater risk.

The Fidelity BrokerageLink will allow participants to invest in more than 4,500 mutual funds at their discretion.

Faculty and staff will need to make new investment selections by November 1 or they will be automatically invested in a Vanguard Target Retirement Fund on November 2 based on their age and anticipated date of retirement. The news report said the university sent a letter to plan participants in late June notifying them that some funds would close as early as July 31 so that employees would not be charged a short-term redemption fee when plan assets are transferred on November 2.

The program redesign was prompted by the new requirements for greater oversight of 403(b) retirement plans. The university changed its program to avoid the daunting task of having to audit some 300 investment options, according to Lori Branley, manager of retirement programs. Stanford also looked at reducing management and administrative fees that reduce the amount plan participants earn from their investments.

In addition to enrollment guides employees will receive soon, the university is offering resources available via a benefits Web site, a series of town hall meetings, and workshops to education employees on new plan options and important deadlines.