403(b)
Observatory Overview
This technical repository monitors the ongoing development of the 403(b) retirement savings market. It compiles and analyzes key metrics such as participant enrollment rates, contribution patterns, and fee structures. Data is drawn from authoritative sources including Department of Labor filings, census information, and institutional disclosures, providing a comprehensive view of market trends and shifts over time.
Definition This metric represents the proportion of eligible employees who made at least one elective salary deferral during the plan year, reflecting active participation levels within 403(b) plans.
Definition This figure represents the median percentage of gross annual salary that employees defer into their retirement plans across the range of tracked 403(b) programs, reflecting typical employee saving behavior within these plans.
Definition This metric indicates the fixed employer contribution rate or the highest percentage match that eligible employees receive from their employers as part of their 403(b) retirement benefits.
Definition The percentage of 403(b) plan sponsors who have implemented automatic enrollment policies for newly eligible employees, highlighting adoption rates of this feature designed to improve participation.
Fee Transparency & Expense Ratios
This comparison examines asset-weighted expense ratios (AWER) within university and nonprofit retirement plan segments. While large institutional plans managing assets over $1 billion continue to see downward pressure on fees—often referred to as "fee compression"—smaller plans have largely maintained steady expense levels without significant reductions.
| Plan Segment and Size | Asset-Weighted Expense Ratio in 2020 | Asset-Weighted Expense Ratio in 2023 | Key Observations |
|---|---|---|---|
| Large University Plans (Assets $1 Billion and Above) | 0.42% | 0.34% | Marked reduction in fees observed, indicating significant fee compression in this segment. |
| Mid-Sized Nonprofit Plans (Assets Between $100 Million and $500 Million) | 0.55% | 0.48% | Moderate changes in expense ratios, showing a noticeable but less dramatic fee shift. |
| Small Nonprofit Plans (Assets Under $50 Million) | 0.84% | 0.81% | Minimal Adjustment |
Data Note: Recordkeeping vs. Investment Fees
The figures presented above combine the costs associated with both investment management and recordkeeping services. In many university contracts, traditional "Revenue Sharing" arrangements—where funds compensate recordkeepers—are increasingly being replaced by flat per-participant administrative fees. This shift enhances transparency in the 2023 data but often limits direct comparability with historical filings prior to 2015, which used different fee structures and reporting standards.
Provider Market Share in Higher Education
Market Trend Insight: TIAA continues to hold the largest share of assets within the higher education retirement plan segment. However, its dominance as the sole provider at many Top 100 research universities has diminished. Competitors like Fidelity and Empower have expanded their presence by securing recordkeeping contracts through competitive bidding processes, gradually eroding TIAA’s exclusive status in these institutions.
Retirement Income Features
The 403(b) market remains a leader within the Defined Contribution (DC) industry by consistently offering robust lifetime income options, setting it apart from other DC plans. Lifetime Income Options Unlike 401(k) plans, which have only recently begun integrating annuity products to provide lifetime income, 403(b) plans have incorporated these features as central components of their offerings since 1952. This long-standing inclusion reflects the unique structure and priorities of retirement planning within the nonprofit and higher education sectors.
Methodology & Verification
The metrics presented in our Observatory are calculated by aggregating weighted data drawn exclusively from primary sources such as regulatory filings and official disclosures. We exclude self-reported survey data from providers unless such information can be independently verified against authoritative regulatory documents, ensuring the accuracy and reliability of our analysis.
Calculation Protocol
Expense ratios are calculated using an "asset-weighted" approach to prevent distortion caused by smaller plans that typically have higher administrative costs relative to their size. Participation rates are measured as a percentage of those "Eligible to Participate" rather than the entire workforce, which excludes groups such as students and seasonal employees to provide a more precise reflection of active plan engagement.
Data Limitations
Governmental 403(b) plans and so-called "Church Plans" typically do not have to submit Form 5500 filings to the Department of Labor. As a result, these types of plans are often underrepresented in our calculations of asset-weighted averages and market share estimates, which rely heavily on Form 5500 data. This limitation means our analysis may not fully capture the total size or trends within these segments of the 403(b) market.
Recent Data Stories
View All Analysis →The Impact of SECURE 2.0 on 403(b) Auto-Enrollment
This article provides a detailed technical examination of how recent federal legislative mandates, introduced through SECURE 2.0, are driving necessary upgrades to recordkeeper systems that manage 403(b) plans. These system changes are essential for compliance and to support new auto-enrollment features required by the law.
September 2024Institutional Fee Compression Benchmarks
This analysis explores why the largest 50 research universities are experiencing more rapid reductions in administrative and investment fees compared to mid-tier colleges. Factors include increased bargaining power, market competition, and evolving plan structures that favor cost efficiency at top-tier institutions.
August 2024Provider Shift: Fidelity vs TIAA Recordkeeping
This report tracks the flow of plan assets as an increasing number of universities adopt dual-vendor models, shifting recordkeeping responsibilities between Fidelity and TIAA. The analysis highlights patterns in provider selection and the implications for plan administration and participant experience.