Lifetime Income

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Mike Webb,  (formerly of Cammack Consulting, now being part of Captrust) who has been one of the true 403(b) thought leaders in the country for a number of years, runs a podcast series called called “Revamping Retirment.”  Mike wanted to have a conversation with me about annuities. We do talk about 403(b)’s in the video, of course, but also of many other annuities issues, like  the reluctance of sponsors to take up lifetime income, the value of annuities as well as their problems as they are currently being sold in the market. This resulted  in a refreshing  22 minutes of great conversation.
Continue Reading A Frank-and Fun-Conversation on Annuities with Mike Webb

There is in the SECURE Act a volume of small, odd, technical  details which need to which attention needs to be paid. This statute is a technocrat’s dream. So much in there actually raises fundamental  infrastructure issues of the sort we rarely see. We are all familiar with the 80/20 rule, with the caution of not letting perfection become the enemy of good. Well, these “oddities” raise the exact inverse of the 80/20 rule: through my long years in retirement product development,  the highest risk of failure arise from the lack of understanding of how the smallest of details can tank a multi-million dollar project. The “80” may sound good conceptually and structurally, but it is in the implementation of the detail in the 20 which will determine the success of the project.
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Continue Reading Tontines and PEP Late Deferrals Are Among the SECURE Act’s Impactful, Infrastructure Oddities

Section 109 of the SECURE Act enables something called “Portability of Lifetime Income Options.” It  is one of those fundamental building blocks with which -regrettably or not, depending on your view of things-  all benefit professionals and all plan sponsors will have to eventually deal. Given that it is effective now, there is some urgency in understanding this thing. One of the challenges is that annuities within Defined Contribution plans are not generally well understood.
Continue Reading SECURE Act and “Portability of Lifetime Income”: Its the “Sleeper” in the Act of which Document Drafters Need to Be Wary

Lifetime Income from Defined Contribution continues to gain traction, which means that those tasked with administering these programs really need to start paying attention to the details of how its done. This also means understanding how the Joint & Survivor Annuity rules-rules which many have spent a career avoiding in 401(k) plans- operate. This then means understanding how Revenue Ruling 2012-03 actually works.
Continue Reading Administering Lifetime Income’s Joint and Survivor Annuity Rules Requires Knowing How Revenue Ruling 2012-3 Operates

The Portman-Cardin Bill, the “Retirement Security and Savings Act of 2019,” introduces sweeping changes to 403(b) plans by expanding their investment universe. These changes, however, also required modification to the Securities Laws otherwise applicable to 403(b) plans in order for them to work. A few, critical, issues have gone unanswered in the legislation, and there are a number of transition issues which we will have to be addressed.
Continue Reading Sweeping 403(b) Changes in Portman-Cardin Legislation Leaves Unanswered Questions

The recent uptick in publications from the private sector focusing on lifetime income is now a welcome surprise, complete with studies showing that participants are now wanting elements of guaranteed income ad part of their retirement arrangements. But lifetime income can be a daunting concept for the non-actuarial/non-insurance professional whose practice is focused on defined contribution arrangements. Where does one even start in trying to figure this out, and whether or not to include it your clients DC plans or IRAs?
Continue Reading The Qualified Longevity Annuity Contract (the “QLAC”) Rules Form Foundation for Understanding of How 401(k) and IRA-Based Lifetime Income Works

IRAs, for whatever reason, are stealthily changing the retirement future. When you look closely at their structures, they can be designed to be incredibly flexible (though often “off-the-shelf” IRAs are not). There are a number of major “houses” which provide the technical and legal support for “plug and play” investment arrangements (though, admittedly, there are a few SEC rules which need to be changed to make them really work well). They provide a personal platform through which retirees can consolidate their assets in a way which can better serve their retirement in ways an employer sponsored DC or DB plan cannot.
Continue Reading Is Lifetime Income’s Future-and, Ultimately, That of Retirement Security- Through the IRA?

How do you audit a 403(b) in-kind distribution? There is no financial transaction, no cash changes hands, there is no change in investments. It really is only a nominal change in the records of the insurer. Yet, somehow, GAAP requires that the “transaction” be verified. There is no answer, yet, to this question, which means the industries (that is, auditors, insurers, and lawyers) will be pressed for finding a standardized approach for bringing audit certainty to this process. It even becomes a bigger issue than 403(b)s: QLACs and other distributed annuity contracts are all able to be distributed as “in-kind” distributions from 401(a) plans as well, and there is no acceptable “recordkeeping” method to audit.
Continue Reading Auditing Distributed 403(b) (and 401(a)) Contracts

Even with all of the interest in the Fiduciary Rule, the DOL is still paying attention to lifetime income-so much so that the Qualified Longevity Annuity Contract (the “QLAC”, established by the IRS) was granted broad relief under the Rule. This relief is so favorable that one of the claims being brought in the 5…