A growing number of 403(b) retirement plan sponsors use third-party administrators (TPAs) for key plan services, and a new analysis shows that practice may be leading to better plan design.

Research from the Profit Sharing/401k Council of America (PSCA) finds that 403(b) plans that use a third-party administrator tend toward better overall plan design. The research, sponsored by the Principal Financial Group, showed an increase in the percent of 403(b) plan sponsors who use TPAs, from 24.6 percent in 2010 to 28.7 percent in 2011. The survey also showed that TPAs work in the small plan market and the large plan market — 56 percent of all survey respondents with 1,000 or more participants use a TPA.

The 2011 403(b) Plan Survey also found that 403(b) plan sponsors who use TPAs reported higher default deferral percentages; More TPA-serviced plans offer a four percent default deferral rate than all plans (21.9 percent vs. 16.4 percent), and fewer offer a 3 percent default deferral rate than all plans (40.6 percent vs. 49.3 percent).