DOL Provides FAQs for Lifetime Income Illustrations

The Department of Labor (DOL) has provided FAQs addressing questions about the timing of implementation of pension benefit statement lifetime income illustrations under the Setting Every Community Up for Retirement Enhancement (SECURE) Act. The SECURE Act requires plan sponsors of ERISA-covered plans to disclose annually a projection of a lifetime income stream that could be generated by a participant’s total accrued benefit. Implementation is to be effective for benefit statements provided more than 12 months after the DOL issued guidance.

The DOL published an Interim Final Rule (IFR) entitled, “Pension Benefit Statements – Disclosure Regarding Lifetime Income” in the Federal Register on September 18, 2020. The FAQ illustrates and confirms that for participant-directed plans required to provide quarterly statements, the first quarterly statement that must meet the lifetime illustration requirements is the second calendar quarter in 2022, or June 30, 2022. For plans that are not participant directed, the first statement will generally be required for calendar year 2021, which would be furnished no later than October 15, 2022.

The FAQ also clarifies that benefit statements providing lifetime income illustrations meeting DOL guidelines under a 2013 Notice of Proposed Rulemaking will satisfy disclosure obligations under the IFR.

The DOL intends to issue a final rule as soon as practicable and acknowledged commenter concerns about potential challenges if a final rule differs materially from the IFR.