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Lifetime Income Disclosure Comment Period Opens

Government Affairs

A month ago, the Labor Department unveiled an interim final rule on lifetime income disclosures on participant statements. Today the window for comments opens.

Under the Interim Final Rule, retirement plans would provide lifetime income illustrations using prescribed assumptions designed, the DOL noted at the time, “to give savers a realistic illustration of how much monthly retirement income they could expect to purchase with their account balance.”

With the publication of the interim final rule in the Sept. 18 Federal Register, the 60-day comment period begins. 

Ultimately, following the comment period, and an opportunity for the DOL to consider and perhaps implement changes based on those comments, the final rule would become effective one year after publication in the Federal Register, will require that participant statements once a year show how a participant’s account balance could be translated into a monthly income amount, both on a single life and qualified joint and survivor account (QJSA) basis. However, and the DOL took pains to emphasize this in publishing the Interim Final Rule—neither that, nor the SECURE Act requires that a plan offer an annuity distribution option.

As outlined in the Interim Final Rule, producing those numbers requires five pieces of information: the account balance, the date of starting payments, the age on which the annuity starts, the interest rate and an estimated end date for the payments. Since only the first (account balance) is known at the point of producing the statement, the other assumptions are proscribed in the rule.

Basically, the SECURE Act outlined the “what,” this Interim Final Rule outlines how.

Let the comments begin…