Happy Friday, readers! If you have been following the industry news this week, you’ll already know that there has been some significant action in Congress on retirement-focused legislation. Among the many provisions being considered in the SECURE Act and RESA is a new safe harbor to protect retirement plan fiduciaries when they offered in-plan guaranteed income products. Experts agree that plan sponsors often skip lifetime income products in plan menus because they are concerned about their own liability should the insurance provider fail to meet their payment obligations at some point in the future. You can read all about this evolving topic in the articles collected below.
Experts suggest an additional annuity safe harbor regulation is unlikely and perhaps even unneeded for promoting greater use of in-plan lifetime income solutions, given that sponsors’ hesitation is often misplaced.
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Eight in 10 DC plan participants are very or somewhat interested in an in-plan investment option that would guarantee monthly income for life in retirement, and the same number express interest in taking money out of their plan at retirement and moving it to a financial product that would guarantee them monthly income for life.
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The Department of the Treasury and the Internal Revenue Service have issued guidance designed to expand the use of income annuities in 401(k) plans.
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Concerns expressed in a survey included fiduciary exposure, high costs and operational hurdles such as recordkeeping issues, among other things.
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The SECURE Act is stalled in the U.S. Senate due in part to several lawmakers’ concerns that it does away with so-called “stretch IRAs,” but tax and inheritance experts say other effective tax mitigation strategies are available.
Although the landmark legislation will take years before it is fully implemented, many of the provisions are already in effect—including two that require immediate changes to the 402(f) notice given to participants to help them understand their rollover options.
As the enforcement date approaches for the sweeping Regulation Best Interest rulemaking package, FINRA is working hand-in-hand with the SEC to ensure effective coordination—and to support advisers working on associated compliance challenges.
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.”
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