Employee participation and adoption of automatic plan features have both surged drastically in 403(b) plans for 2024, finds new research from the Plan Sponsor Council of America (PSCA).
According to the organization’s 403(b) Plan Survey, the number of employees saving in 403(b) plans increased by five points in 2024, with 85.1% of eligible workers holding an account balance.
A higher number of employees also made contributions in 2024, at 78.3% compared to 73.7% from the year prior. These employees continued to defer an average of 6.7% of gross annual pay in 2024, while employers contributed a slightly higher average of 5.4% of gross pay for a combined savings rate of 12.1%, according to PSCA.
Along with employee participation, automatic enrollment saw another notable rise in 2024 with 41.5% of plans offering the feature, and more notably for small and midsize businesses. This is up 31.5% compared to two years ago, observes the research.
Auto-escalation continues to climb as well, now reaching 46% of all plans with automatic enrollment.
Other features, like the number of plan investment options and the availability of advice, have also surged in 2024, while loan and hardship usage dropped to 12.2%.
PSCA’s survey identifies legislation from SECURE 2.0 as a major catalyst in modernizing the plan types.
“We are seeing rapid change in 403(b) plans, spurred in part by SECURE 2.0, accelerating their modernization and making them look a lot more like 401(k) plans. Plan design features that have become best practices in corporate plans are taking hold in the nonprofit space,” said Hattie Greenan, PSCA’s director of research and communications. “It is not a coincidence that we are seeing record participation and savings rates as features such as automatic enrollment and escalation become more widely implemented.”
This includes trends like Roth adoption, which saw double-digit growth in 2024 thanks to a pending SECURE 2.0 requirement that would allow catch-up contributions in Roth plans. According to PSCA, nearly 80% of plans currently offer Roth contributions, up from 68.2% in 2023.
The nonprofit community has long argued for expanding corporate plan features to 403(b) accounts, including the availability of collective investment trusts (CITs) in these plans. Current law does not allow for CITs in 403(b) plans, but potential bipartisan legislation could soon change that.
“The 2025 results reinforce what we’re seeing across the nonprofit community—employees want more flexible, personalized pathways to save, and employers are responding,” said Ivan Gregory, executive vice president and head of Service and Sales – East at Mutual of America Financial Group, who sponsored the survey. “As nonprofits continue navigating workforce pressures, offering a strong, modern retirement plan has become a critical part of attracting and retaining talent.”