New research by Cerulli Associates has found that the 403(b) market is just as profitable, if not more so, as other defined contribution businesses. Of the providers surveyed, 43% said that their profit margins on 403(b) plans were greater than those of other DC businesses. The Cerulli research also reveals that more than one-third of plan sponsors are unaware of the administrative costs involved in their plan. In addition, while guaranteed withdrawal benefits have become a popular offering among insurers, Cerulli notes that the benefits "can come at a steep cost, which can significantly impact the account value over time."
While we're on the subject, the American Society of Pension Professionals & Actuaries (ASPPA) is asking the IRS to delay implementation of its final rules regarding revisions to 403(b) plans. IRS has said that the effective date of the new regs would be January 1, 2008, but ASPPA wrote in early July that given the fact that August was approaching and the final regs had not been released, the deadline should be moved to January 1, 2009.
As of July 2, a Massachusetts law kicked in requiring all of its residents to obtain health insurance. Under the law, residents with annual incomes below the federal poverty level are eligible for no-cost care. Residents with annual incomes up to three times the poverty level can enroll in state subsidized plans, while those with incomes more than three times the poverty level can choose their own coverage from new, lower-cost private plans if they are not offered coverage through their employers.
