Bill Requiring Retirement Income Disclosures Resurfaces

By ASPPA Net Staff • April 10, 2017 • 0 Comments
Bipartisan, bicameral legislation that would require 401(k) plan sponsors to inform participating workers of the projected monthly income they could expect at retirement has been reintroduced on Capitol Hill.

The legislation, The Lifetime Income Disclosure Act (S.868), was introduced in the Senate by Sens. Johnny Isakson (R-Ga.) and Chris Murphy (D-Conn.), who introduced the same bill in the 114th Congress. That bill was included in the Retirement Enhancement and Savings Act of 2016 (RESA), which was approved by the Senate Finance Committee on Sept. 21, 2016 by a unanimous vote.

According to a press release, the Lifetime Income Disclosure Act is patterned on the Social Security Administration’s annual statements, which are mailed each year to working Americans to inform them of their estimated monthly benefits based on their current earnings.

Under the Act, DC plans subject to ERISA — including 401(k) plans — would be required to inform participants annually about how their account balance would translate into a monthly income stream based on age at retirement and other factors.

To ensure there is no material burden or potential liability on employers that voluntarily sponsor 401(k) plans, the legislation directs the Department of Labor (DOL) to issue tables that employers may use in calculating an annuity equivalent, as well as a model disclosure. Employers and service providers using the model disclosure and following the prescribed assumptions and DOL rules would be insulated from liability.

Companion legislation was introduced in the House by Reps. Luke Messer (R-Ind.) and Mark Pocan (D-Wis.).