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Key Findings on 403(b), 457 and 401(a) Market

The Cerulli  Report — U.S. Not-For-Profit & Governmental Defined Contribution Plans 2016: Addressing the 403(b), 457, and 401(a) Markets

Key points

  • The not-for-profit (NFP)/governmental defined contribution (DC) market consists of the Federal Thrift Savings Plan (TSP), 403(b), 457, and 401(a) markets.
  • This market represents approximately 8% of the total U.S. retirement market
  • This market is expected to grow at a compound annual growth rate (CAGR) of 7% to reach $2.4 trillion by 2020.

403(b) market 

  • "Highly diverse" 
  • Consists of ERISA-covered 403(b) plans (private plans) and non-ERISA covered plans (public plans) 
  • Main sectors: healthcare, higher education, and K-12 schools
  • Approximately two-thirds of plans "engage" an advisor or consultant
  • The multi-vendor environment "introduces...complications"
  • The "concept of choice and degree of choice...emerges as a divisive topic" 
  • Cerulli is "most bullish" on potential of healthcare and higher education sectors for asset growth

457 market

  • Two main categories: governmental 457(b) plans and non-governmental 457(b) and 457(f) plans
  • Government 457(b) market is largest of two categories

401(a) market 

  • Typically offered by governmental entities
  • Can combine employer and employee contributions
  • Generally offered as one of "mandatory" savings plans (choice between 401(a) or DB plan)

To learn more about this research, or to purchase a full report click here