That’s what retirement plan sponsors across the country need to be asking their plan administrators about this quarter. Why? The 2019 Secure Act mandated that participants receive two illustrations, at least once each year, showing what their retirement savings would like if annuitized.
Interim Rule Now In Effect
Research indicates that about 25% of adults in the U.S. have no retirement savings, and only 36% believe that their retirement plans are viable. Longer life spans have policymakers, legislators and advocates sharing a concern: insufficient savings for the post-work chapters of our lives. As CNBC reports, the Department of Labor has long been on the path to spur more retirement saving by illustrating for participants how far their nest eggs will (or won’t) take them:
The U.S. Department of Labor began moving toward implementing a lifetime-income illustration requirement in 2013, but the effort stalled — only to be revived as a provision in the Secure Act. The agency is expected to issue a final rule at some point in the coming months, as instructed in that legislation, that governs how the information is presented to 401(k) participants and what it should include.
As mandated in the 2019 Secure Act, 401(k) plan administrators will start providing illustrations on quarterly or annual statements showing an estimate of how much guaranteed lifetime income you could potentially get if the balance were annuitized.“The general intent here is to educate plan participants about how much their actual account value would [be] in monthly income,” said Jason Berkowitz, chief legal and regulatory affairs officer for the Insured Retirement Institute.
Generally speaking, participants can expect to find the illustrations on their 401(k) statement beginning in 2022. Some workers could see the information on their next quarterly statement (for the three months ending Dec. 31). Under the interim rule now in effect, two illustrations would be provided at least once a year: one showing the estimated monthly income from a single life annuity — monthly payments made until the owner dies — and the other as a joint annuity with benefits for a surviving spouse.
Increased Interest In Annuities?
As the lifetime income illustrations mandated by the SECURE Act begin to appear on participant statements, experts predict that retirement savers may be more interested in exploring annuities. In preparation, plan sponsors are investigating the options with their plan advisors. Providers too are looking at new ways to offer guaranteed income options that appeal to retirement plan participants.
Stay Up To Date
Industry experts are urging plan sponsors to actively participate in periodic reviews with their advisors, and recordkeepers—and listen carefully to updates on legislation and regulations. In addition to income illustrations, an issue that’s of course top of mind these days is cybersecurity. The Department of Labor (DOL) has been active with audits this year, and wants to ensure that plan sponsors are implementing the detailed cybersecurity protocols released earlier this year. An important, practical step for plan sponsors themselves is ensuring a timely and expert response plan for cyber breaches—which can rapidly become fiduciary breaches too!
Colonial Surety’s Cyber Liability Insurance arms plan sponsors with assistance at every stage of incident investigation and breach response. In the event of a breach, carefully vetted forensics experts and specialized lawyers help plan sponsors determine what’s been compromised, and provide:
- Breach resolution and mitigation services
- Computer expert services
- Legal services
- Public relations and crisis management expenses
- Customer notification services
- Call center services
In just a few minutes you can affordably obtain Cyber Liability Insurance—and Fiduciary Liability Insurance from Colonial Surety. Our comprehensive packages provide: the ERISA bond required to protect the assets of the retirement plan from theft; Fiduciary Liability coverage to protect you and your assets from personal liability; and, Cyber Liability coverage to safeguard your company and plan from covered losses and expenses in the event of a cyber breach.
Colonial Surety Company is in business all across the USA. We are rated “A Excellent” by A.M. Best Company and U.S. Treasury listed. Serving customers since 1930, Colonial Surety is the trusted source for the pension industry to secure legally required ERISA bonds, fiduciary liability insurance and cyber-liability insurance. We help safeguard plan sponsors, pension professionals and financial advisors — and keep their businesses compliant — with pain-free, efficient, and friendly service every time.