401(k) Lifetime Income

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Most of the commonly available individual annuities sold to consumers are not suitable for the purchase by plans as part of their DC Lifetime Income program without changes being made to the design, administration and compensation (it is also worthwhile to note that the pricing and disclosure rules related to individual and retirement plan products can be vastly different). The differences can range from the types of disclosures being way, to the handling of money in and none out, to the manner in which it is all reported on required annual statements, along with a basketful of other sorts of requirements.

A number of insurers have made the investment necessary to accomplish this feat. It does, however, become a key fiduciary inquiry as to whether or not the annuity being purchased has been designed for use by retirement plans plans.  Recognize also that different products of the same insurer might be supported by different systems and processes, and the fiduciary will need to make sure it is getting to the right one.
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Continue Reading “Engineering” the Use of Individual Annuities In DC Lifetime Income Programs

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

A more complete and up to date description of how lifetime income can work in a DC plan is in order. Evan Giller (newly Of Counsel with Boutwell and Faye) and I put together the attached piece entitled “Regulatory and Fiduciary Framework for Providing Lifetime Income from Defined Contribution Plans.” It is originally appearing in the New York University Review of Employee Benefits and Executive Compensation – 2013. Published by LexisNexis Matthew Bender. Copyright 2013 New York University.” In the paper, we’ve drawn upon our long experience with retirement plan annuities, mixing it well with all of these new developments.
Continue Reading A Regulatory and Fiduciary Framework for Providing Lifetime Income from Defined Contribution Plans