Both of these agencies (Treasury and DOL) continue to attempt to support this process, using their existing regulatory authority. Though there are a number of things which probably need legislative action in order to really make guaranteed lifetime income readily available, there are still a few things regulators may want to consider doing to help it all along
Continue Reading Suggestions for Regulatory Next Steps to Accommodate DC Annuities

For those of you who do not subscribe to BNA, BNA published as an "Insight" an article I wrote on QLAC and Rev Rul 2012-3 (yes, my author agreement permits me to post it here, with attribution).  Look for Paul Hamburger’s upcoming related article, delving into a number of technical and policy issues they raise

The Treasury’s issuance of proposed regulations introducing the "Qualified Longevity Annuity Contract" is a substantial step in the efforts to better provide plan participants the ability to use their defined contribution balances to plan for retirement security. One of the QLAC’s most useful effects is that it gives us a "base," a laboratory of sorts

I have spent much of my career studying and practicing in the law of annuities as it applies to retirement plans-starting even prior to my long stint with an insurance holding company, when the Master Trust of the Fortune 100 company for which I was in-house ERISA counsel formulated its own synthetic, pooled GIC for

Treasury nailed it (or, as our eldest son is fond of saying, they just "friggin’" nailed it).

With just a relatively short regulation and a Revenue Ruling, Treasury simply and in a very straightforward way laid out the definitive structure for defined contribution plans (like 401(k) plans) to start providing lifetime income in a market friendly manner. The two pieces of guidance dealing with DB plans which were issued at the same time are very useful, but the meat of the matter is the critical guidance given under the proposed RMD regulation and the spousal consent Revenue Ruling, 2012-3.
 
The seminal guidance doesn’t answer all the questions, but it does creates the structure, and a context, in which other questions-both from the tax and the ERISA side-can be meaningfully addressed.  Amazingly, it is also structured in such a manner to accommodate both straight life annuities and the living benefit products as well (like the GLWB).
 
I had criticized IRS and Treasury in the past for what I had viewed as the less than thoughtful way in which they were addressing (and not addressing) critical lifetime income issues. The new releases change all of that, and–the more I look at it-in a pretty startling way. I’m not sure I have ever seen so much stuffed into so little a regulatory space.
 
I particularly like the proposed QLAC (“qualified lifetime annuity contract”): its an everyman’s rule. It is nonforfeitable (many argued that it be otherwise), and it is simply designed for meaningful use by the rank and file. Other, more exotic, annuities with living benefits and the like (which are generally geared for the high net worth participant) still can be used for lifetime income as 2012-3 Contracts, but they just won’t get the beneficial QLAC treatment under the RMD rule. There’s really no sane policy reason to incent those products, as such would actually serve as a disincentive to guaranteed lifetime income. 
 
I’d like to share with you some of my initial thoughts on just what the proposed QLAC reg and Rev Rul 2012-3 did. Discussion and further study may shift some of these, but for now:
 
 
 

Continue Reading Treasury and IRS Successfully Lay the Base For Lifetime Income: The “2012-3 Annuity” and The QLAC