Tap into the tax-exempt market

Only 59.7% of tax-exempt organizations have a financial professional.1 Nearly half of tax-exempt plans don’t. And they can use your help. So how do you stand out?

Prepare yourself for the conversation

Find out what makes tax-exempt plans different. Learn what types of questions to ask in your discussions with plan sponsors.


Who should you target?

  • Associates
  • Charities
  • Churches
  • Credit unions
  • Cultural organizations
  • Hospitals and healthcare services
  • Private schools, colleges and universities

What should you ask?

Use these questions to start and guide your conversation. They’ll help you demonstrate your value.

Q1: Governance and responsibility as fiduciaries

Do you and other management and/or board members feel confident in the plan’s governance and responsibility as fiduciaries?
Often times, the management and board aren’t aware they’re fiduciaries. Do they understand their role?

Q2: Fiduciary due diligence

Who helps with your fiduciary due diligence?  Do you have a documented process in place?
Most tax-exempt plan sponsors are focused on their organization’s mission, they’re generally not fiduciary experts. Many believe their service provider is handling it.

Q3: Fee policy statement

Do you have a fee policy statement and review process in place?
It’s important to document guidelines for managing and allocating fees and expenses, and to consider whether the fees and expenses are reasonable.

Q4: Multiple service providers/legacy assets

Does your plan use multiple service providers or have legacy assets (assets held by former providers) with multiple providers? If yes, how do you coordinate administration?
Consider things like loans, hardship distributions, qualified domestic relations orders, small amount force outs and beneficiary designations.

Q5: Investment policy statement and review

Do you have an investment policy statement and review process in place?
We believe this is a fiduciary best practice, but many organizations don’t have an investment policy statement or a review process.

Q6: Education policy

Do you have an education policy in place?
Do you review it often and measure its effectiveness?
Is the plan sponsor consistent in providing direction? Having a policy is important, but it’s also important to make sure it’s working the way it should be.

Q7: Measuring success

Are you consistently measuring the success of your plan? How?
Generally, the goal of a retirement plan is to help employees get retirement ready. Does the plan sponsor know if the plan is helping employees achieve that goal?

Reminder: Speak their language. Don’t call them companies, call them organizations. Or, in the case of private schools, call them institutions.

1Plan Sponsor Council of America (PSCA) 2022 403(b) Plan Survey, table 126.

The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment advice or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.


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