Senate committee unanimously approves bill to ease use of annuities in 401(k) plans

Legislation also would require defined-contribution plans to make lifetime income disclosures, and allow small employers to combine plans

Sep 21, 2016 @ 4:52 pm

By Mark Schoeff Jr.

The Senate Finance Committee unanimously approved legislation Wednesday that would make it easier for retirement plan sponsors to add annuities to their programs.

The bill would provide safe harbor from lawsuits for plan sponsors that choose an annuity provider overseen by state regulators. The measure also would allow plan participants to roll over lifetime income investments into individual retirement accounts, if the sponsor decides not to continue to offer the option.

(More: Government Accountability Office pushes DOL to update 401(k) annuity rules)

The bill, the Retirement Enhancement and Savings Act, would make several other changes to 401(k) and IRA administration, including requiring defined-contribution plans to make lifetime income disclosures annually.

It also is designed to expand retirement coverage by allowing small employers in unrelated industries to combine to offer retirement plans to their workers.

“What we're doing with this legislation is beginning to modernize retirement policy in this country,” Sen. Ron Wyden, D-Ore., ranking member of the Senate Finance Committee, said during the panel's deliberations.

The committee chairman, Sen. Orrin Hatch, R-Utah, said, “It will increase the portability of retirement plans and the reliability of lifetime income by making it easier for employers to offer annuity contracts — a form of life insurance — as part of their employee retirement benefits.”

(More: DOL fiduciary rule could cause half of potential IRA rollover assets to stay put: report)

The bipartisan comity was hailed by an industry participant.

“This is what a normal [legislative] process looks like, and it was on a retirement-savings bill,” said Jamie Kalamarides, senior vice president and head of full service solutions for Prudential Retirement. “It's exciting to reach this important milestone in the Senate.”

The panel moved the bill to the Senate floor along with a measure that would strengthen pensions for coal miners.

The two are expected to move together and potentially be attached to a year-end spending bill. Political support for the miner pension legislation could help propel the retirement-savings bill in both the Senate and House.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

Joe Duran: How to compete in a technologically changing world

The CEO of United Capital explains why advisers should have a strong presence on smartphones, make the most of video capabilities and go "bionic" to free themselves from time-consuming chores.

Latest news & opinion

Raymond James executives call on industry to keep broker protocol

Also ask firms to pay for the administration of the protocol to 'ensure its longevity and relevance.'

House passes tax bill, focus turns to Senate

Tax reform legislation expected to have more of a challenge in upper chamber.

SEC enforcement of advisers drops in Trump era

The agency pursued 82 cases against advisers and firms in fiscal year 2017, down from 98 the previous year.

PIABA accuses Finra of conflicts of interest

Public Investors Arbitration Bar Association report slams self-regulator over its picks for board of governors.

Betterment launches 'free' charitable-giving platform

Robo-software provider lets investors donate directly from their accounts, and will not charge charities with less than $1 million on the platform.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print