Happy Friday, readers! Spend even a little time working in the retirement plan services industry and one will see that complexity is an inherent characteristic of the marketplace. This is particularly true when it comes to solving the “decumulation challenge.” Simply put, helping plan participants turn a lump sum of cash savings into a sustainable retirement income stream is hard. Participants want the safety of a guarantee, but they fear the lack of liquidity associated with annuitization. Fortunately, new products and strategies are emerging that may help participants access the income protection they want while also providing a greater degree of flexibility.
According to Cerulli research, the various parties involved in the implementation of an in-plan retirement income solution are often not on the same page about basic terminology and definitions.
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According to Willis Towers Watson, just over 80% of organizations acknowledge the importance of their older workers and managing the retirement process; however, only about half believe they understand the process well, and just one-quarter feel they have found an effective approach.
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Low and middle-income Americans struggling to save for retirement are depending on the U.S. Senate to pass the SECURE Act, advocates say. At present, one roadblock seems to the law’s treatment of “stretch IRAs.”
Washington insiders say Senator Ted Cruz is probably the biggest roadblock to the SECURE Act being passed in the near-term under unanimous consent; among other issues, he wants the bill to allow people to use tax-advantaged 529 college savings accounts to pay for home school expenses.
A new IRS private letter ruling essentially conforms the tax treatment of properly structured advisory fees from non-qualified annuity contracts to those paid out of qualified accounts, which typically are not treated as taxable distributions.
There is precious little time remaining for the proposal and adoption of any new advisory industry conflict of interest rules that the DOL hopes to make effective during this presidential administration.