403(b) Plans

Are Your Plan’s Investment Options Consistent with Your Organization’s Mission (and your employees’ values)?

The typical 403(b) platform has a menu of mutual funds that are made available by the recordkeeper. However, some investment options may conflict with an organization’s mission statement or value statement. More, employees of non-profit organizations are often confronted with a list of investment options that may conflict with their own personal values or convictions. If those convictions are strong enough, some employees may not participate in the plan.

Why Would an Organization Offer a 403(b) vs a 401(k)?

403(b)’s are not subject to ADP discrimination testing (ACP testing and other discrimination testing still applies), but the tradeoff is “universal eligibility”. A plan is not allowed to exclude employees or impose service requirements for employee deferrals in the same manner as a 401(k). A 403(b) may impose eligibility criteria for employer contributions similar to a 401(k).

The 401(k) product space is more evolved than the 403(b) product space. While 403(b) products continue to evolve, fees are often lower in a 401(k) product. Additionally some popular recordkeepers do not offer a 403(b) product or only have a product for larger plans. Whether this is meaningful for your organization depends upon your plan demographics, employee demographics, and support required.

403(b) plans may allow participants to make even greater contributions than those allowed under a 401(k) plan due to a special catch-up contribution rule for employees with at least 15 years of service.

At Harmon Street Advisers

We apply our same customized, results-oriented process to serving 403(b) plan sponsors. However our experience has taught us that serving nonprofits and their employees requires a higher level of understanding for the needs of the organization and its employees. A well-run 403(b) plan can be a cost-effective way to help attract and retain talent, and our service model is designed to relieve your HR department from much of the burden for day-to-day plan operations.

Our Services

Take the first step to getting the results you desire and service you deserve. Contact Harmon Street Advisors to schedule a complimentary consultation.