US Public Sector Employees Get Help With 403(b) Plans

Mike Godfrey, Tax-News.com, New York

13 March 2001

Public sector and other non-profit employees wanting to use 403(b) retirement savings plans traditionally haven't received as much help from providers as the more prevalent users of 401(k) plans. Investors in 403(b) plans, most of them teachers, have had only limited access to information that could help them better shop for investment products. Cleveland-based NEBSonline aims to change that.

A division of National Employee Benefit Services Inc., NEBSonline began offering online retirement account service last year for nonprofit employees.

Participants create a personal investment profile to assess how much risk they tolerate. Once the account is activated, employees can compare the performance of investments from different vendors, make changes to their account or have a financial professional review the changes before making any moves - services that have been available for years to their counterparts in the private sector..

Nonprofit employees can take advantage of a variety of products to save up money in their 403(b) plans, but most have to call each individual provider for any information. And the number of choices are more overwhelming than in the private sector because public employers don't endorse any one provider.

That's something else NEBSonline would like to change. Already 15 school groups across the country have begun offering retirement options through NEBSonline. Teachers in any of those districts can invest with 38 different companies, each offering probably 100 different investment products.

Presumably because of the historic lack of information about 403(b) plans, fewer than half of nonprofit employees take part in them, while 85 percent of their counterparts in the private sector use 401(k) plans. Yet many of these would-be investors are the ones teaching the next generation of investors, he said.

NEBSonline currently manages tax-deferred retirement savings for about 10,000 participants. While growth has been slow at the beginning, the company is confident its service will catch on, partly because NEBSonline offerings also helps school districts better manage their responsibilities under IRS regulations.

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