K Plan Features Offer Little Incentive to Participate (free login required)

I find this quite interesting considering every time I bring up the topic of 403b plans having much lower participation rates than 401k plans I get attacked about the lack of a match in the 403b. Turns out that the match doesn't account for the huge gap.

Now, of course the industry will always have the pension arguement to fall back on (since there is a pension there is less participation), but I don't wholly buy that arguement either (though I do believe the pension provides a false sense of security leading some to not participate or participate as much as they should). If 403b participation is in the 40% range and 401k's are in the 70% range the difference cannot just be the pension plan (of which there are still private sector employees who offer both), perhaps the difference can be explained by something else........structure.

The 403b is structured terribly, it is fragmented and has an ugly retail distribution model. The 403b needs reform and I believe the new regs just be provide that impetus. It's time that a new model was given a chance.