Tuesday, March 12, 2013

The Rise of State Run 403(b) Programs?

Most states offer some sort of multiple employer deferred compensation plan (457(b)), far fewer offer a similar 403(b) program, but this might be changing.

Some states offer the 403(b) plans through a retirement system, others through an office like the Treasurer.  Most of these plans appear to be low-cost in nature and some are downright cheap!

Are state run 403(b) programs the future for 403(b)?

Perhaps, but they lag far behind in assets and usually lack a salesforce.  With a few tweaks, they could easily rise to prominence - though the opposition to them is quite fierce.  Just the mention of a state assembly wanting to offer such a program and anti-fiduciary forces descend like moths to a flame.

I did a little research and came up with the following states that offer (this doesn't mean it's available to all school employers in that state) a 403(b) program:







North Carolina (launches this summer)


Florida (not actually a state plan)

Wisconsin (this is a union run program, but has the same effect)

These programs are run by mainstream providers - ING, Great-West, Nationwide, TIAA-CREF and VALIC to name a few.

Which state will be next?

Scott Dauenhauer CFP, MSFP, AIF