More On Legal & Compliancefrom The Advisor's Professional Library
- Differences Between State and SEC Regulation of Investment Advisors States may impose licensing or registration requirements on IARs doing business in their jurisdiction, even if the IAR works for an SEC-registered firm. States may investigate and prosecute fraud by any IAR in their jurisdiction, even if the individual works for an SEC-registered firm.
- Best Practices for Working with Senior Investors Securities examiners deal harshly with RIAs that do not fulfill their fiduciary obligations toward senior investors, as the SEC and state securities regulators view older investors as particularly vulnerable and in need of protection.
The Treasury Department plans to release soon guidance for employers on how best to integrate lifetime income products into 401(k)s and other employer-sponsored retirement plans, while the Department of Labor plans to follow with similar guidance early next year.
Treasury and DOL issued a request for information (RFI) last year that included 39 questions for those in the retirement planning space about the products they offer, impediments to offering them, and whether or not participants use such products when they are offered.
J. Mark Iwry, senior advisor to the secretary and deputy assistant secretary for retirement and health policy at Treasury, said at an event in Washington on Monday titled “Picturing Your Retirement Income,” that the Treasury will soon be ready to start this series of “guidance items that DOL and Treasury are working up in response to the RFI on lifetime income.”
Treasury, he said, “will start with the sweep of items that will be intended to get the ball rolling, not to be a solution, but a first step–or series of first steps–to be followed by further guidance by DOL and Treasury.”
The event was sponsored by the American Council of Life Insurers, AARP, American Benefits Council, U.S. Chamber of Commerce and Women’s Institute for a Secure Retirement.
Iwry said Treasury will be putting out a package of guidance first, with DOL then following early next year.
As it stands now DOL’s Employee Benefits Security Administration (EBSA) is working on a proposed rule under ERISA Section 105 that would require or facilitate the presentation of a participant’s accrued benefits–i.e., the participant’s account balance, as a lifetime income stream of payments in addition to presenting the benefits as an account balance.
Phyllis Borzi, head of EBSA, who spoke on the same panel as Iwry, said that post the RFI, EBSA and Treasury have “begun a very robust dialogue about whether there should be ways to encourage employers to offer lifetime income streams in lieu of lump sum” distributions.
“We know that when offered a lump sum most people take it,” Borzi said, which isn’t always the best route.
Borzi said, “We have begun to focus on how we can begin to educate people about the importance of lifetime income.” Some folks have suggested DOL and Treasury think about making employers provide lifetime income illustrations—that is, showing employees “what their savings would yield.”
Federal employees are provided with illustrations of lifetime income on their retirement planning statements, she said, and the anecdotal evidence says it has caused employees to increase their savings.