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Recently, ADMIN Partners hosted a webinar for financial advisors that focused on the underserved 403(b) markets. During this conversation, we touched on the topic of 501(c)(3) non-profits and how beneficial a 403(b) retirement plan can be to their organization.

It’s unfortunate how often the non-profit marketplace is overlooked when it comes to retirement planning. Whether it be a lack of education on how to properly service the plan or concerns around budget limitations, non-profits are often neglected by those working in the retirement industry. With this in mind, ADMIN wants to remind both employers and financial representatives of the importance in servicing this market.

Here are a few reasons that non-profit organizations can benefit from offering a retirement plan.

THEY HAVE OPTIONS

A 501(c)(3) non-profit has more than one option when it comes to retirement plans. Among some of those options is the traditional 401(k) Plan or they can choose a 403(b) Plan. So, which one to pick? While there are benefits to both plan types, it is often recommended that non-profits use a 403(b) Plan as their retirement plan option. The reason for this is that unlike a 401(k) Plan, 403(b) Plans can stay exempt from ERISA which means less responsibility and cost to the employer. By limiting discretion and allowing voluntary contributions only, employers can avoid the lengthy and costly year end process.

*Should a Plan Sponsor decide they want to add employer contributions and become subject to ERISA, they can do so and use a TPA to transition their plan.

AN ADDED BENEFIT FOR EMPLOYEES

It’s no secret that most non-profit organizations operate on strict budgets. This translates to lower wages for employees and less benefits than what people might find in a for-profit setting. A 403(b) plan is the perfect low budget benefit for non-profit employers to offer their staff. This option is appealing for on-boarding employees and workers to save for the retirement without creating a large expense for the plan.

THE PLAN COMES WITH SUPPORT

In our experience with working in the non-profit marketplace, we have often heard employers express concerns around the responsibility tied to a retirement plan. Sure, the plan is an added benefit for employees, but what about keeping the plan compliant? How can they remain exempt from ERISA and monitor contribution limits without creating considerable costs to the plan? The answer is in the form of a TPA; one that works alongside their financial advisor to ensure the plan continues to operate in a compliant manner. This level of support also assist the plan is limiting their discretion and avoids them deflecting their attention away from the mission of their organization.


To learn more about how non-profit organizations can benefit from a retirement plan, contact ADMIN Partners directly at 877-484-4400, Option 2.