Business of Benefits

Business of Benefits

Tag Archives: Rev Rul 2012-3

The Qualified Longevity Annuity Contract (the “QLAC”) Rules Form Foundation for Understanding of How 401(k) and IRA-Based Lifetime Income Works

Posted in Lifetime Income
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

Auditing Distributed 403(b) (and 401(a)) Contracts

Posted in 403(b), Lifetime Income, Plan Administration
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

DOL and Lifetime Income

Posted in Lifetime Income
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… Continue Reading

DOL Provides Key ERISA Guidance on QLAC/DC Lifetime Income

Posted in Fiduciary Issues, Lifetime Income
The DOL just published its first serious guidance on supporting lifetime income with the publication of FAB 2015-2, guidance which is very necessary for the success of the Qualified Longevity Annuity Contracts, as well as DC lifetime income income. The FAB is an initial, but substantial, step in addressing one of the most pressing of the ERISA issues related to providing lifetime income from defined contribution plans.… Continue Reading

The 403(b) QLAC

Posted in Lifetime Income, Uncategorized
The QLAC seems to be in the 403(b) “sweet spot”, considering that 403(b) annuities were originally designed to provide lifetime income in the first place. However, as with all things 403(b), however, there are a few unusual twists when trying to put a QLAC in a 403(b) arrangement. Here are a few of the things to consider… Continue Reading

A Useful Compendium of Lifetime Income Guidance for Defined Contribution Plans

Posted in Fiduciary Issues, Lifetime Income
We have been extensively researching, writing on and developing the concept of providing lifetime income from defined contribution plans for some 15 years. The work has resulted in a patent; several major independantly published research papers; the  outlining of some of the important concepts which underline the proposed QLAC regs and its key revenue ruling; and… Continue Reading

A Regulatory and Fiduciary Framework for Providing Lifetime Income from Defined Contribution Plans

Posted in Lifetime Income, Lifetime Income Published Papers
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

Suggestions for Regulatory Next Steps to Accommodate DC Annuities

Posted in Lifetime Income
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

BNA’s “First Steps to Modernizing DC Annuitization: QLACs and Revenue Ruling 2012-3”

Posted in Lifetime Income, Lifetime Income Published Papers
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,… Continue Reading
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