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DOL Issues Proposed Rule Requiring Lifetime Income Illustrations on Defined Contribution Plan Benefit Statements

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May 2013

The DOL issued an Advanced Notice of Proposed Rulemaking (ANPRM) requesting feedback on a proposed rule that would require defined contribution plans to include lifetime income stream illustrations on participants’ benefit statements. Benefit statements would show the participant’s current account balance and the projected account balance, adjusted for inflation, at “normal retirement age.” The proposed rule would only require illustrations to be included on the statements of those participants who have not yet reached normal retirement age.

The proposed rule would measure compliance by a “reasonableness” standard; income projections based on “reasonable assumptions taking into account generally accepted investment theories” would comply with the rule as long as they are “expressed in current dollars and [take] into account future contributions and investment returns.” The DOL is also considering inclusion of a “safe harbor” provision that, if followed, would satisfy the reasonableness requirement. In anticipation of this rule, the DOL has also posted a lifetime income calculator on its website that could serve as a tool for plan sponsors to perform the necessary calculations. Comments to the DOL regarding the proposed rule are due by July 8, 2013.  

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