The 403b plans are regulated by a set of rules, which were composed in such a way that they reinvent all the plans that attract defined contributions. These plans are given by entities which are tax-exempt as are higher education institutions, school systems and other non-profit organizations.
The growing 403b plan market represents a very good business opportunity for financial advisors. It would however be a mistake for an advisor to assume that he may simple redirect from a 401k advice practice to a 403b tax-exempt field.
The K-12 sector and the higher education market do share many similarities; however there are also many and noteworthy differences to take into account. One significant difference between the two is that some higher education institution plans which offer contributions by the employer are governed by another legislation which is the ERISA, or the Employee Retirement Income Security Act. In fact it seems that plan sponsors sometimes set up a 401k plan, in order to keep their 403b plan, from being regulated by the ERISA.
This means that at the end of the day, the advisors who would like to enter the 403b plan market, will probably be working with plan that are governed by the ERISA, as well as with plans that are not. Advisors may also choose between the two which option, best suits their expectations.
Another major difference between K-12 plans and higher education plans is the presence of a union. In the higher education segment, there is a high degree of bureaucracy, since there are deans and heads of department to deal with. These people however will not have enough authority to effect changes, as well unions in the K market.
Reference: http://www.planadviser.com/magazine/article.php/4248
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