The agency wants employees who have rollover options to move their benefits from DC plans to defined benefit (DB) plans. A proposed rule slated for publication in the Federal Register on Wednesday outlines safeguards for benefits that are rolled over from defined contribution plans.
“What we’re doing will hopefully give people an incentive to choose a savings option that they can’t outlive or outspend,” says PBGC Director Josh Gotbaum. “Annuities always offer greater retirement security.”
Under the new proposal, benefits earned from a rollover generally would not be affected by PBGC’s maximum guarantee limits. Currently the agency’s maximum guaranteed benefit for a 65-year-old retiree is almost $59,320 a year.
Also, rollover amounts generally would remain untouched by PBGC’s so-called “five-year phase-in limits.” Normally, benefit increases from changes to a plan in the five years before it ends are partially guaranteed. For instance, 20% of the increase is paid after one year, 40% after two years and so on. Under the new proposal, these restrictions generally would not apply.