The Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor, in cooperation with the Treasury Department, will shortly be issuing a RFI—or Request for Information—to solicit comments concerning retirement security and lifetime income for retirement plans—and particularly for 401(k) plans.
In its 2009-2010 Work Plan, the DOL stated in a Fact Sheet:
Lifetime Income Options for Retirement Plans
EBSA plans to enhance retirement security by reducing the chances that workers will run out of funds during their retirement years, ultimately supporting the Secretary’s good jobs for everyone policy.
Key Action: Request for Information (RFI)
The Department’s EBSA plans to publish an RFI in January 2010 to solicit views, suggestions and comments from the public on how to enhance retirement security for all workers by reducing the chances that workers will run out of funds during their retirement years. The RFI asks 37 specific questions designed to obtain focused commentary to help EBSA make its determinations.
Key Concern and Issues to be Addressed
An ever increasing number of workers are looking to their defined contribution plans for their retirement security, but at the same time many workers are receiving their retirement benefits in lump sum distributions. This could increase the risk of running out of money after retirement.
Specifically, the Agencies are exploring whether and how to enhance retirement security for employees in defined contribution plans by facilitating access to, and use of, lifetime income or other arrangements designed to provide a lifetime stream of income after retirement.
We believe this is the first step by the government to focus the private sector on the importance of converting 401(k) accounts into lifetime income. We anticipate that this will ultimately result in new regulations and legislation that encourage and facilitate services and products that guarantee income for life for participants based on their 401(k) accounts and rollover IRAs.