A Fidelity study reveals that 403(b) plan sponsors are showing mixed feelings as they prepare to implement pending regulatory changes to the plan announced by the Internal Revenue Service last month. Among the changes, employers will be responsible for selecting investment choices that make the most sense for participants.
"The good news is that the new regulations will encourage plan sponsors to streamline the number of vendors and investment options available in 403(b) plans," said John Begley, executive vice president for Fidelity Investments Tax-Exempt Service Co.
Fidelity research concludes that 85% of plan sponsors are somewhat or very concerned about side effects of the regulatory action. As a result, most plan sponsors, 61%, say they fear increased fiduciary responsibility, 61% fear compliance issues and 56% fear increased administrative burdens.
"While many sponsors are raising concerns, we believe these concerns are to be expected given the magnitude of these changes and how long it has been since 403(b) regulations have seen any material modifications," said Begley.
Fidelity is offering a suite of tools to help sponsors through the transition while meeting fiduciary responsibilities. They consist of a plan document template, sample RFP for facilitating the vendor selection process, recordkeeping and administrative support and communication materials.