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Guest Article

Deloitte logo

(From the August 16, 2010 issue of Deloitte's Washington Bulletin, a periodic update of legal and regulatory developments relating to Employee Benefits.)

Labor and Treasury Departments to Hold Joint Hearing on Lifetime Income Options


On September 14 - and if necessary September 15 - the Departments of Labor and Treasury will hold a joint meeting to receive input from interested persons on five specific areas of interest relating to lifetime income options in retirement plans.

In February 2010, the Departments of Labor and Treasury issued a joint "request for information," identifying broad areas of interest regarding lifetime income options as they might impact qualified retirement plans, ERISA fiduciary duties, participant education, etc. The Departments reported that they received over 780 comments in response to their request.

After reviewing the comments, the Departments distilled five specific areas in which they would like to receive further input. In a notice issued on August 10, they announced that a joint hearing will be held on September 14, and, if necessary, September 15, in order to hear testimony related to:

  1. Specific Participant Concerns Affecting the Choice of Lifetime Income Relative to Other Options. Several persons had expressed reluctance to consider lifetime income options because of concerns about the long-term viability of the issuing institutions, inflation risk, fees and complexity, and limits on death benefits and withdrawal options. Testimony is sought on these concerns, how they can be addressed, and steps policymakers might take to address them.
  2. Information to Help Participants Manage and Spend Down Retirement Benefits. Testimony is sought on the information participants might find useful in deciding how to manage and spend their retirement benefits.
  3. Disclosure of Account Balances as Monthly Income Streams. Testimony is sought on whether participants in 401(k) and other defined contribution plans would be more likely to consider a lifetime income option if their benefit statement provided, in addition to the account balance, their benefit in the form of a monthly lifetime benefit. If so, should the income stream be based on the current account balance or the projected account balance at a future date (e.g., normal retirement)? What interest and mortality rates should be used? Should the Departments create a computer model that can be accessed for this purpose? What are the administrative costs in providing such information on the benefit statements?
  4. Fiduciary Safe Harbor for Selection of Lifetime Income Product. Testimony is sought on the particular changes that should be made to the fiduciary safe harbor for the selection of annuity providers under Labor Regulation § 2550.404a-4. In particular, should the criteria depend on the size of the plan? On the type of lifetime income product? Are there standards the Department could provide to provide comfort to plan fiduciaries regarding the solvency of the provider?
  5. Alternative Designs of In-Plan and Distribution Lifetime Income Options. Testimony is sought on the variety of in-plan and distribution lifetime income options that are or will be in the marketplace, and related financial, actuarial and legal issues.

A news release on the hearing was also released. Persons interested in presenting testimony at the hearing must submit a request by 3:30 pm on August 16, preferably by email (e-ORI@dol.gov).


Deloitte logoThe information in this Washington Bulletin is general in nature only and not intended to provide advice or guidance for specific situations.

If you have any questions or need additional information about articles appearing in this or previous versions of Washington Bulletin, please contact:

Robert Davis 202.879.3094, Elizabeth Drigotas 202.879.4985, Mary Jones 202.378.5067, Stephen LaGarde 202.879-5608, Bart Massey 202.220.2104, Tom Pevarnik 202.879.5314, Sandra Rolitsky 202.220.2025, Deborah Walker 202.879.4955.

Copyright 2010, Deloitte.


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