Traditional annuities are inflexible. Period. You get the monthly benefit you pay for. They provide a very valuable benefit which should be part of anyone’s retirement planning, but this inflexibility can be scary, as it takes away from the participant the ability to address unexpected contingencies. This fear comes from the second point: the funds used to buy the traditional annuity are gone for good. Other than payments made under a survivor annuity, the traditional annuity doesn’t give the participant any access to funds to pay for contingencies, nor does it typically pay a death benefit. So what’s a fiduciary to do?
Continue Reading Addressing Fiduciary Concerns in the Purchase of 401(k) Distributed Annuities: Dealing With The Five “I’s”- Part 2, Inflexibility and Inaccessability
DOL Shows Its Swagger; Annuities Pick Up Steam
The Swagger
I had the privilege to speak on a 403(b) panel at the recent DOL/ASPPA "DOL Speaks" seminar, with Lisa Alexander and Susan Reese of the DOL. Our own panel went very well, with Susan and Lisa both speaking directly to and recognizing the transition problems related to this new 403(b) world. As Lisa
Pang/Warshawsky vs. GAO: Recent Study Challenges Traditional Thinking About DC Annuities
“GAO Retirement Study” “401(k) Annuities”
Continue Reading Pang/Warshawsky vs. GAO: Recent Study Challenges Traditional Thinking About DC Annuities
2009 Form 5500 Schedules A and C Will Create New Fiduciary Burdens For Plan Sponsors
Retirement plan vendors throughout the industry are engaging in efforts to prepare for the new disclosure requirements for the 2009 Form 5500 schedules, particularly the disclosures related to direct and indirect compensation under Schedule C and the substantial requirements for Schedule A.
I had the pleasure of a couple of informative conversations this week which
CPA Group Struggles With 403(b) Rules
BNA reported on August 20th the concerns of the AICPA’s 403(b) Plan Audit Task Force about practitioners "misunderstanding" of the impact of the recently issued DOL FAB 2009-2, where the DOL took steps to alleviate some of the more draconian impacts of the new Form 5500 reporting rules for certain 403(b) plans.
Task force members are reported
Can DC Annuities Reduce Risk of Poverty?
I sat sown this morning to follow up with Part 2 of my mini-series addressing the fiduciary risks in purchasing DC annuities (link here to Part 1), when a Plan Sponsor magazine article caught my attention. It spoke of a study which linked the lack of pensions with the risk of poverty among women
403(b) Form 5500 Changes May Be Permanent
The DOL’s release of FAB 2009-2 may well more significant than I took at first glance. Soon after blogging on the release of the FAB and how it sets us up to develop a more permanent solution, Ellie Lowder and my colleagues Evan and Monica let me know of a different view: they believe that
DOL Avoids A 403(b) Train Wreck With FAB 2009-2. A Learning Opportunity For the IRS?
The DOL released to Field Assistance Bulletin 2009-2 on July 20th, which provides much needed Title 1 reporting relief for 403(b) plans.
So, first of all, our hats off to Ass’t Sec’y Borzi, for what looks to be one of her first public acts, and to the Good Bob Doyle, for showing true leadership in
Addressing Fiduciary Concerns in the Purchase of 401(k) Distributed Annuities: Dealing With The Five “I’s”- Part 1, Irrevocability
The first element in a fiduciary review is to get at least a layman’s grasp on the nature of insurance and insurance regulation. Pooling risks with others is an uncomfortable concept that is foreign to fiduciary with a defined contribution mindset Because of pooling and this “30 year risk,” insurance is regulated in ways of no other industry
Continue Reading Addressing Fiduciary Concerns in the Purchase of 401(k) Distributed Annuities: Dealing With The Five “I’s”- Part 1, Irrevocability
403(b) Fiduciary Challenges Demand Applying ERISA in Unique Way
So what are we finding as we get down to this nitty gritty of things? Most striking is the unique ways in which ERISA’s fiduciary rules will need to be used in their application to ERISA 403(b) plans. It is not that the rules were never there in the past, it is just that the new rules have forced the industry and employers to more closely define their relationships and the duties for which vendors and employers will each be responsible. This process of defining roles have caused us all to look more closely at how the rules apply, in ways we have never done in the past….Let me give you an example…What are the ERISA implications of a fund substitution under individual annuities for the 403(b) plan fiduciary?
Continue Reading 403(b) Fiduciary Challenges Demand Applying ERISA in Unique Way