(Raleigh, NC) -- State Treasurer Dale R. Folwell, CPA, announced today that the North Carolina Supplemental Board of Trustees (Board) have decided to discontinue the NC 403(b) Program, opting to focus on the larger, low-cost and more popular NC 401(k) and NC 457 Plans. After an in-depth review and recognizing extremely low participation by members, the Board voted unanimously on Dec. 2 to eliminate this option. The NC 401(k) Plan, NC 457 Plan, and NC 403(b) Program are jointly administered by the Board and Department of State Treasurer (DST).
The NC 403(b) Program was introduced in 2014 as an additional option for the employees of school districts and community colleges to reach their retirement savings goals. While the Program offered competitive, low-cost investment options, enrollment in the Program lagged in the crowded 403(b) marketplace. As of December 31, 2021, the NC 403(b) Program has just over 1,400 participants and less than $33 million in assets.
By contrast, the NC 401(k) and NC 457 Plans serve a total participant base of almost 300,000 and more than $16 billion in assets. All employers and employees who participate in the NC 403(b) Program are eligible to participate in both the NC 401(k) Plan and the NC 457 Plan. In fact, all 94 school districts and community colleges in the NC 403(b) Program participate in the NC 401(k) Plan, with 88 of those also offering the NC 457 Plan.
“The Board and DST recognized that other programs are better for members and that we can never be great at it given the small size of the 403(b) program,” Treasurer Folwell said. “Furthermore, we have one of the largest 401(k) offerings of its type in the United States and a strong participant showing with the NC 457 Plan. These Plans are administered with a participant-first mentality while keeping performance high and costs and fees low. Simply put, the NC 401(k) Plan and the NC 457 Plan offer a better retirement savings opportunity than the NC 403(b) Program for those that teach and serve students in North Carolina.”
DST will notify employers and participants in the coming weeks of this decision. Over the course of 2022, DST and Prudential, the recordkeeper for the Plans, will educate employers and participants about the elimination of the NC 403(b) Program, their transition options and will work with employers and participants through the process.
The NC 401(k) and NC 457 Plans are administered by the N.C. Department of State Treasurer and the Supplemental Retirement Board of Trustees, and offered by more than 1,100 public employers, including state agencies, local governments, school districts and community colleges. For more information see NCPlans.