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

Regional brokerages are picking up assets, advisers from wirehouses

Senior columnist Bruce Kelly discusses with deputy editor Bob Hordt the impact of big brokerage houses pulling back on recruiting and regionals promising recruits less bureaucracy.

Latest news & opinion

10 must-know facts about today's 401(k) plans

Here are the latest changes in 401(k) plans across areas such as investments, fees, contributions, investment advice and more.

Questions abound as Ohio National stops commission payments this week

Advisers are grappling with how to proceed, with their clients and their businesses, as the insurer's new annuity trail policy takes effect.

Top 10 RIAs in the South

These are the largest registered investment advisory firms in the Southern U.S., based on AUM.

Top 10 RIAs in the Midwest

These are the largest registered investment advisers in terms of AUM in the Midwestern U.S.

Top 10 RIAs in the Northeast

These are the largest registered investment advice firms in the Northeastern U.S., in terms of assets under management.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print