Department of Labor Issues Temporary FAQs for Lifetime Income Illustrations

The Department of Labor on Monday issued temporary implementing frequently asked questions in connection with an interim final rule that sets out for retirement plan administrators the method for calculating lifetime income illustrations. The IFR becomes effective on Sept. 18.

Although DOL is in the process of finalizing a lifetime income rule that would supersede the IFR, it is unclear whether the final rule will emerge before the Sept. 18 deadline. The DOL is providing the temporary FAQs to confirm, among other things: the Sept. 18 applicability date and the method of furnishing pension benefit statements or individual account plans.

According to the FAQs, for participant-directed plans, plans that must issue quarterly statements can incorporate their first lifetime income illustration on any quarterly statement ending no later than June 30, 2022. For non-participant-directed plans, lifetime income illustrations must be furnished no later than the last date for timely filing of the annual return. In the release, DOL also acknowledged concerns about the final rule possibly not being adopted sufficiently in advance of the IFR’s effective date but stated only that it plans to issue a final rule “as soon as practicable.” When issued, the final rule will govern the requirements for lifetime income illustrations.

The American Bankers Association issued a comment letter generally in support of the proposed rule, but recommended further changes to improve functionality and compliance certainty.