2021
Recordkeeping Survey
Industry Snapshot
457 Plans
From a governmental perspective, the request for proposals (RFP) process for a 457 plan is different than for a 401(k) or a 403(b): Public notices and specific requirements dictate how vendors must be selected. In addition, 457 plans likely need different educational offerings and perhaps website tools and messaging. Most government employees are enrolled in a defined benefit (DB) plan and therefore consider the 457 to be supplemental and often neglect to use them.
457 plans also include smaller varieties: nonprofit 457(b)s and 457(f)s; those too might have restrictions, given their nonprofit status.
Michael Glackin, president of CBIZ InR Advisory Services LLC, in Media, Pennsylvania, points to some distinct differences between 401(k) and 457 plans. It is still common to see insurance companies group annuity sub-accounts with the insurance sub-accounts being offered to 457 plan participants, and employers often will have more than one 457 provider. “Many times, an employer has adopted more than one plan document, with different plan provisions,” Glackin notes.
Employers sponsoring a 457 plan may also have a limited understanding of their fiduciary responsibility regarding, say, plan investments and fees. “At CBIZ, we work to educate our clients about their fiduciary responsibility and stress the importance of the sponsor acting in its employees’ and their beneficiaries’ best interest,” he says. Although public retirement plans need not follow the Employee Retirement Income Security Act (ERISA), the law can give guidance or act as a benchmark for governmental plan sponsors in performing their day-to-day responsibilities, monitoring their plan and requesting a fee proposal.
“When developing an RFP or conducting a search for a new provider, consider the practices currently used in the 401(k) market,” says Glackin. Questions that are asked in 401(k) service provider RFPs may still be directly applicable to 457 plans and may help these plan sponsors make informed decisions. —PS
Total assets
Total plans
Total participants
45,796
8,670,357
$498B
Total assets
Total plans
Total participants
45,796
8,670,357
$498B
Total assets
Total plans
Total participants
45,796
8,670,357
$498B
Total assets
Total plans
Total participants
45,796
8,670,357
$498B
