[Federal Register: August 10, 2010 (Volume 75, Number 153)]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
DEPARTMENT OF LABOR
Employee Benefits Security Administration
DEPARTMENT OF THE TREASURY
Internal Revenue Service
Hearing on Certain Issues Relating to Lifetime Income Options for
Participants and Beneficiaries in Retirement Plans
AGENCY: Employee Benefits Security Administration, U.S. Department of
Labor; Internal Revenue Service, Department of the Treasury.
ACTION: Notice of hearing.
SUMMARY: Notice is hereby given that the Department of Labor and the
Department of the Treasury (the ``Agencies'') will hold a joint hearing
to further consider several specific issues relating to lifetime income
or other arrangements designed to provide a lifetime stream of income
after retirement for participants and beneficiaries in retirement
DATES: The hearing will be held on September 14, 2010, and, if
necessary, September 15, 2010, beginning at 9 a.m., EST.
ADDRESSES: The hearing will be held at the U.S. Department of Labor,
200 Constitution Avenue, NW., Washington, DC 20210.
FOR FURTHER INFORMATION CONTACT: Stephanie L. Ward or Luisa Grillo-
Chope, Office of Regulations and Interpretations, Employee Benefits
Security Administration, U.S. Department of Labor, at (202) 693-8500 or
Peter J. Marks, Office of Division Counsel/Associate Chief Counsel (Tax
Exempt and Government Entities), Internal Revenue Service, Department
of the Treasury, at (202) 622-6090. These are not toll-free numbers.
SUPPLEMENTARY INFORMATION: The Agencies published in the Federal
Register on February 2, 2010 (75 FR 5253), a request for information
(RFI) regarding whether, and, if so, how, by regulation or otherwise,
it would be appropriate for them to enhance the retirement security of
participants in employer-sponsored retirement plans and in individual
retirement arrangements (IRAs) by facilitating access to, and use of,
lifetime income or other arrangements designed to provide a lifetime
stream of income after retirement. The Agencies received approximately
780 comments in response to the RFI.
The RFI posed several questions on a broad range of topics designed
to help the Agencies assess the issues relating to the shift from
defined benefit plans that offer employees lifetime annuities to
defined contribution plans that typically distribute retirement savings
in a lump sum payment. With the continuing trend away from traditional
defined benefit plans to defined contribution plans and hybrid plans,
including the associated trend away from annuities toward lump sum
distributions, employees are not only increasingly responsible for the
adequacy of their savings at the time of retirement, but also for
ensuring that their savings last throughout their retirement years and,
in many cases, the remaining lifetimes of their spouses and dependents.
Following a careful review of all the comments received in response
to the RFI, the Agencies have decided to conduct a limited public
hearing for the purpose of further considering and gathering further
information on a few discrete issues and proposals raised or presented
in RFI submissions. In this regard, the scope of the public hearing
will be limited to testimony and questions relating to the following
1. Certain Specific Participant Concerns Affecting the Choice of
Lifetime Income Relative to Other Options. A number of individuals and
participant representative groups indicated that many participants who
are choosing the form in which to
receive their retirement benefits were reluctant to consider a lifetime
income option because of their concerns about, among other things, the
long-term viability of the institution issuing the lifetime income
product, inflation risk, the fees and complexity associated with some
lifetime income products, and concerns about a lack of or limits on
death benefits and withdrawal options. The Agencies are interested in
hearing testimony on these considerations and concerns, how they are or
can be addressed in the market or via plan design, and recommendations
concerning steps policymakers and regulators might take to address
2. Information to Help Participants Make Choices Regarding
Management and Spend Down of Retirement Benefits. The Agencies are
interested in learning more about the particular types of information
that would be useful to participants when making their choices about
how to manage and spend their retirement benefits, and the methods and
materials by which the information could be provided to participants,
including what behavioral finance teaches in this regard. Several
commenters on the RFI recommended that the Department of Labor provide
guidance on how plan sponsors and service providers can assist
participants in understanding and preparing for the spend down of
retirement assets without potential fiduciary liability. For instance,
one specific question is how the Department of Labor should expand and
clarify Interpretive Bulletin 96-1 to provide useful spend down
guidance to be relied upon in providing participants with information
to help them make better informed retirement income decisions.
3. Disclosure of Account Balances as Monthly Income Streams. Many
commenters believe there is a need to make available to participants
more information on the benefits and value of a lifetime stream of
income as compared to a lump sum distribution. The Agencies are
interested in hearing testimony on whether participants in 401(k) and
other defined contribution plans would be more likely to give due
consideration to lifetime income stream options if they were furnished
a benefit statement that, in addition to their account balance, sets
forth their benefit in the form of a monthly lifetime benefit. If so,
should such income streams be based on the participant's accrued
benefit (account balance) as of the date of the statement or based on
the individual's projected account balance at some future date, such as
normal retirement age under the plan or social security retirement age,
and would this information would be more helpful to participants who
are close to retirement than to younger participants? If the stream of
payments depicted in the benefit statement is based on an account
balance projected to some future date (e.g., normal retirement age),
what contribution rate (e.g., the participant's current contribution
rate or a specified percentage of current compensation adjusted
annually) and what rate of return should be assumed during the
accumulation phase, and what interest rate should be used for
converting the account balance into an income stream? Alternatively, if
the stream of payments depicted is based on the participant's current
account balance converted immediately to payments commencing at a
future date (e.g., normal retirement age), what interest rate should be
used for the conversion? In either case, what mortality rates should be
used? Should the statement explain what actuarial assumptions were used
in estimating the actuarial equivalent of an account balance in the
form of a monthly lifetime benefit? Should it quantify or otherwise
explain any uncertainty associated with the reported monthly income?
Should the Agencies or another Federal agency create a computer model
or guidelines that can be accessed for purposes of performing such
calculations? What administrative costs and burdens should be factored
in to assessing the merits of either encouraging or requiring 401(k) or
other defined contribution plan administrators to provide such
information on an individual benefit statement?
4. Fiduciary Safe Harbor for Selection of Lifetime Income Issuer or
Product. A number of commenters recommended that the Department of
Labor revise the annuity selection safe harbor to provide an objective
standard that fiduciaries could rely on in selecting and evaluating the
various lifetime income products. The Department of Labor is interested
in hearing testimony on what particular changes should be made to the
fiduciary safe harbor for the selection of annuity providers for the
purpose of benefit distributions from defined contribution plans in the
Department of Labor's regulation 29 CFR 2550.404a-4. In this regard,
should different criteria apply to a fiduciary's decision depending on
the size of the plan? Should different criteria apply depending on the
type of lifetime income product? Are there standards that the
Department of Labor could establish to provide comfort to plan
fiduciaries regarding the solvency of the provider? Should the safe
harbor be extended to other lifetime income options?
5. Alternative Designs of In-Plan and Distribution Lifetime Income
Options. Several commenters provided information concerning a variety
of in-plan and distribution lifetime income options, some insured,
others not. The Agencies are interested in better understanding and
further exploring those and other approaches to offering streams of
lifetime income to plan participants, including approaches that are or
will be available in the marketplace, and related financial, actuarial
and legal issues.
The hearing will be held on September 14, 2010, and, if necessary,
September 15, 2010, beginning at 9 a.m., EST, in the plaza auditorium
of the U.S. Department of Labor, Frances Perkins Building, at 200
Constitution Avenue, NW., Washington, DC 20210.
Persons interested in presenting testimony and answering questions
at this public hearing on one or more of the five issues specified
above must submit, by 3:30 p.m., EST, August 16, 2010, the following
information: (1) A written request to be heard; indicating which of the
five specified issues the person proposes to address and (2) an outline
of the main points to be discussed regarding the specified issue or
issues, indicating the time allocated to each point. It should be noted
that, while reasonable efforts will be made to accommodate requests to
testify on the specified issues, it may be necessary to limit the
number of those testifying in order to adhere to the hearing's format.
Any persons not afforded an opportunity to testify will nonetheless
have an opportunity to submit a written statement on the specified
issues for the record. The hearing will be open to the general public.
Because the Agencies will jointly review all responses submitted,
interested parties may send requests and outlines to either Agency and
need not submit responses to both Agencies . Respondents are encouraged
to use the title ``Lifetime Income Joint Hearing'' to facilitate the
organization and distribution of responses between the Agencies.
Interested parties are invited to submit responses to:
Employee Benefits Security Administration, U.S. Department of
Labor: To facilitate the receipt and processing of responses, the
Department of Labor encourages interested persons to submit their
requests and outlines electronically by e-mail to e-ORI@dol.gov.
Persons submitting requests and outlines electronically should not
submit paper copies. Persons submitting requests and outlines on
paper should send or deliver their requests and outlines (preferably at
least three copies) to the Office of Regulations and Interpretations,
Employee Benefits Security Administration, Attn: Lifetime Income Joint
Hearing, Room N-5655, U.S. Department of Labor, 200 Constitution
Avenue, NW., Washington, DC 20210. All requests and outlines submitted
will be available to the public, without charge, online at http: //
www.dol.gov/ebsa and at the Public Disclosure Room, N-1513, Employee
Benefits Security Administration, U.S. Department of Labor, 200
Constitution Avenue, NW., Washington, DC 20210.
Internal Revenue Service. Comments to the IRS, identified by REG-
148681-09, by one of the following methods:
Mail: CC:PA:LPD:PR (REG-148681-09), Room 5205, Internal
Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC
Hand or courier delivery: Monday through Friday between
the hours of 8 a.m. and 4 p.m. to: CC:PA:LPD:PR (REG-148681-09),
Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue,
NW., Washington, DC 20224.
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments (IRS REG-148681-09).
All submissions to the IRS will be open to public inspection and
copying in room 1621, 1111 Constitution Avenue, NW., Washington, DC
from 9 a.m. to 4 p.m.
The Agencies will prepare an agenda indicating the order of
presentation of oral comments and testimony. In the absence of special
circumstances, each presenter will be allotted ten (10) minutes in
which to complete his or her presentation.
Information about the agenda will be posted on http://www.dol.gov/
ebsa and http://www.regulations.gov on or after August 26, 2010, or may
be obtained by contacting Stephanie L. Ward or Luisa Grillo-Chope,
Office of Regulations and Interpretations, Employee Benefits Security
Administration, U.S. Department of Labor, telephone (202) 693-8500.
This is not a toll-free number.
Those individuals who make oral comments and testimonies at the
hearing should be prepared to answer questions regarding their
information and/or comments.
Any individuals with disabilities who may need special
accommodations should notify Stephanie L. Ward or Luisa Grillo-Chope on
or before August 27, 2010.
Notice of Public Hearing
Notice is hereby given that a public hearing will be held on
September 14, 2010, and, if necessary, September 15, 2010, concerning
issues related to lifetime income options for participants and
beneficiaries in retirement plans. The hearing will be held beginning
at 9 a.m. in the plaza auditorium of the U.S. Department of Labor,
Frances Perkins Building, at 200 Constitution Avenue, NW., Washington,
Signed at Washington, DC, August 4, 2010.
Phyllis C. Borzi,
Assistant Secretary, Employee Benefits Security Administration,
Department of Labor.
Signed at Washington, DC, August 3, 2010.
Nancy J. Marks,
Division Counsel/Associate Chief Counsel, Tax Exempt and Government
Entities, Internal Revenue Service, Department of the Treasury.
Signed at Washington, DC, August 3, 2010.
J. Mark Iwry,
Senior Advisor to the Secretary, Deputy Assistant Secretary for
Retirement and Health Benefits, Department of the Treasury .
[FR Doc. 2010-19624 Filed 8-9-10; 8:45 am]
BILLING CODE 4510-29-P