Assets in 403(b) plans, the tax-deferred defined-contributionoption for non-profit and educational institutions, are fastapproaching the $1 trillion mark, new data from the InvestmentCompany Institute shows.

That’s compared to the $4.7 trillion held in 401(k) plans.

While the ICI’s new data on the non-profit workplace savingsoption shows 403(b) plan design is benefiting from greaterdiversification and cost benefits, one attribute jumps off thepage.

Variable annuities hold 27 percent of 403(b) assets, and fixedannuities claim another 26 percent.

Those numbers are the envy of proponents of annuitizing 401(k)assets, who are fighting an uphill battle in the effort to createguaranteed income streams from plan savings.

Annuities occupy little space in401(k) plans. According to the Employee Benefit SecurityAdministration, less than 1 percent of all workplace definedcontribution plans even offer annuities in investment lineups.

The disparity is not necessarily because sponsors of 403(b) plans take thepaternalistic approach to plan design that many advocates ofretirement security wish 401(k) sponsors would take.

Nor is it necessarily due to the non-profit sector being morepolitically and culturally aligned with the defined benefit cultureof days past.

Mike Ericson, a research analyst at LIMRA, which tracks annuitysales, cautions against comparing the primary savings options inthe for-profit and non-profit world.

“There was a time when 403(b) savings plans were completelyannuitized,” he explained.

That changed with the passage of the Employee RetirementSecurity Income Act, he said, which allowed sponsors to beginoffering mutual funds to 403(b) participants.

The result has been a steady shift in assets from annuities tomutual funds. By 2012, mutual funds accounted for 47 percent of all403(b) assets.

As mutual funds’ share of the pie has grown, so have the type offunds offered. About 43 percent of assets in mutual funds where inequity-designed products, with 8 percent being in balanced targetdate funds, and another 8 percent in bond funds.

By comparison, TDFs make up about 22 percent of all assetsin the 401(k) world, according toNorthern Trust’s defined contribution tracker.

Index funds, favored by cost-conscious administrators, are alsoon the rise in 403(b) plans, representing about 14 percent of all403(b) assets.

That helps explain continued lowering of overall costs toparticipants. In the 2012 the average 403(b) plan paid 75 basispoints in total costs, down from 80 in 2009.

As is in the 401(k) universe, smaller plans suffer from limitingcost efficiencies. Participants in plans with less than $1 millionin assets paid an average expense ration of 81 basis points ondomestic equity mutual funds, compared to 48 basis points forparticipants in plans with more than $1 billion in assets.