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BY ALLisoN BeLL
Stock Ilustration Source/ Campbell Laird
AFew Ye ARs AGO, the idea of eliminating the differences between 403(b) plans and 401(k) plans seemed to make obvious sense. Barriers were falling between France and Germany, between banks and insurance companies, and even between Paul simon and Art Garfunkel. If simon and
Garfunkel could converge, why not the rules for for-profit employers’
defined contribution plans and nonprofit employers’ defined contribution
plans?
Now, the euro is shaky, regulators are prying banks and insurers apart,
and simon and Garfunkel have canceled their comeback tour.
The effort to remake the 403(b) plan in the 401(k) plan’s image has also
run into troubled water, with no bridge to be seen.
The problem is that the conventional wisdom—that a 403(b) plan is
just a 401(k) plan for an employer with an annual fundraising banquet—is
wrong, 403(b) plan specialists say.
At 403(b) plans, “there was very little, if any, employer involvement,”
according to susan diehl, president of the National Tax sheltered Accounts
Association (NTsAA), an affiliate of the American society of Pension
Professionals & Actuaries (AsPPA), Arlington, va. “They never had control
for 40 years. Now, 40 years later, everything kind of blows up.”
