Here is the text of the Secure Act legislation regarding reporting life income projection to plan participants. I can’t wait for the regulations on this one, not to mention the potential confusion it will cause among participants.
Let’s see those assumptions‼️
Of course, you can … right now … take your anticipated fund balance and put that amount into an immediate annuity calculator and get the same level of accuracy for an estimate.
“EXPLANATION OF PROVISION
The provision requires a benefit statement provided to a defined contribution plan participant to include a lifetime income disclosure as described in the provision. However, the lifetime income disclosure is required to be included in only one benefit statement during any 12-month period.
A lifetime income disclosure is required to set forth the lifetime income stream equivalent of the participant’s total account balance under the plan. The lifetime income stream equivalent to the account balance is the amount of monthly payments the participant would receive if the total account balance were used to provide lifetime income streams, based on assumptions specified in guidance prescribed by the Secretary of Labor (referred to as the ‘‘Secretary’’ in this explanation). The required lifetime income streams are (1) a qualified joint and survivor annuity for the participant and the participant’s surviving spouse, based on assumptions specified in guidance, including the assumption that the participant has a spouse of equal age, and (2) a single life annuity. The lifetime income streams may have a term certain or other features to the extent permitted under guidance.
The Secretary is directed to issue, not later than a year after the provision is enacted, a model lifetime income disclosure, written in a manner to be understood by the average plan participant. The model must include provisions to (1) explain that the lifetime income stream equivalent is only provided as an illustration, (2) explains that the actual payments under the lifetime income stream that may be purchased with the account balance will depend on numerous factors and may vary substantially from the lifetime income stream equivalent in the disclosure, (3) explain the assumptions on which the lifetime income stream equivalent is deter- mined, and (4) provides other similar explanations as the Secretary considers appropriate.
In addition, the Secretary is directed, not later than a year after the provision is enacted, (1) to prescribe assumptions that defined contribution plan administrators may use in converting account balances into lifetime income stream equivalents, and (2) issue interim final rules under the provision. In prescribing assumptions, the Secretary may prescribe a single set of specific assumptions (in which case the Secretary may issue tables or factors that facilitate conversions of account balances) or ranges of permissible assumptions. To the extent that an account balance is or may be invested in a lifetime income stream, the prescribed assumptions are to allow, to the extent appropriate, plan administrators to use the amounts payable under the lifetime income stream as a lifetime in- come stream equivalent.
Under the provision, no plan fiduciary, plan sponsor, or other person has any liability under ERISA solely by reason of the provision of lifetime income stream equivalents that are derived in accordance with the assumptions and guidance under the provision and that include the explanations contained in model disclosure. This protection applies without regard to whether the lifetime income stream equivalent is required to be provided.
The requirement to provide a lifetime income disclosure applies with respect to benefit statements provided more than 12 months after the latest of the issuance by the Secretary of (1) interim final rules, (2) the model disclosure, or (3) prescribed assumptions.”