403(b) Plans Tuned In to Education
As 403(b) plans are offered by educational institutions, nonprofits, hospitals and other such organizations, it may come as no surprise that they are more likely than 401(k), 457 and other types of defined contribution (DC) plans to foster participants’ education, according to the “2019 PLANSPONSOR Defined Contribution Industry Report—403(b) Plans.”
For instance, 56.3% of 403(b) plans offer their employees a student loan repayment program, compared with just 40.9% of plans in all industries, and nearly one in five, 19.5%, make an employer contribution to a 529 college savings plan—more than double the percentage of DC plans in all industries.
Additionally, 8.0% of 403(b) plans give tuition reimbursement for higher education, 8.7% offer student loan refinancing programs, and just one-third (35.0%) neglect to offer any kind of assistance at all with higher or continuing education, compared with 6.1%, 2.6% and 51.5% of DC plans in all industries, respectively.
The report also showed that permitting loans from defined contribution plans is nearly universal, with 96.3% of DC plans in all industries offering this feature. This is only slightly less true for 403(b) plans, with 93.1% making loans possible. And the average loan balance for 403(b) plans and DC plans overall are essentially on par, with the former having an average balance of $9,896, and the latter, $10,257.
A relatively new development among defined contribution plans has been to let separated employees continue making loan payments after they have left the company. This is a further area where 403(b) plans differ from all industries’ DC plans and indicates more of a laissez-faire attitude on this point; 48.3% of 403(b)s allow loan payments to continue past termination, compared with 26.1% of plans in all industries.
Assistance With Higher/Continuing Education
| Plans in All Industries | 403(b) Plans | |
| Employer contributions to 529 plan | 7.90% | 19.50% |
| Tuition reimbursement for higher education | 6.10% | 8.00% |
| Student loan repayment | 40.90% | 56.30% |
| Student loan refinancing | 2.60% | 8.70% |
| None | 51.50% | 35.00% |
Does the Plan Include a Loan Provision?
| Plans in All Industries | 403(b) Plans | |
| Yes | 96.30% | 93.10% |
| No | 8.10% | 6.20% |
| Unsure | 0.70% | 0.70% |
What Is the Average Loan Balance for Participants With Outstanding Loans?
Does Your Plan Allow Separated Employees to Continue to Make Loan Payments After Termination?
