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Thompson Hine LLP, a full-service business law firm with approximately 400 lawyers in 8 offices, was ranked number 1 in the category “Most innovative North American law firms: New working models” by The Financial Times and was 1 of 7 firms shortlisted for The American Lawyer’s inaugural Legal Services Innovation Award. The firm has been recognized by the National Law Journal as a Legal Technology Trailblazer and featured by Bloomberg for its innovative service delivery models, which drive accuracy and predictability. The firm’s commitment to innovation is embodied in Thompson Hine SmartPaTHTM – a smarter way to work – predictable, efficient and aligned with client goals. For more information, please visit ThompsonHine.com and ThompsonHine.com/SmartPaTH.

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On August 18, 2020, the U.S. Department of Labor (DOL) issued an interim final rule requiring 401(k) and other individual account plans to annually provide participants with lifetime income illustrations of their account balances. Specifically, the rule requires plans to annually disclose to each participant the hypothetical single life annuity (SLA) and qualified joint and 100% survivor annuity (QJSA) monthly payments that the participant’s account balance will yield based on various required assumptions. These illustrations will be required under provisions of the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), as discussed below, and are intended to help participants in individual account plans better understand how their account balances translate into monthly income in retirement and to better prepare for retirement.

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The SLA and QJSA illustrations must be provided to any participant or beneficiary who has an account balance in the plan, and must be derived using the following assumptions:

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The rule provides liability protection for providing the illustrations contingent on the illustrations including certain model disclosures. The model disclosures explain the various assumptions utilized for the illustrations, and also explain that the estimated payments are for illustrative purposes only and that benefits that may be purchased with the participant’s account balance will depend on a variety of factors and may vary substantially from the illustrations. The model language can be integrated into existing benefit statements or included in a supplement to the benefit statement. The rule also provides special rules that apply if a plan offers annuity distribution options or for participants that have purchased deferred annuities.

The rule is effective as of August 18, 2021 and applies to benefit statements provided after that date. However, the DOL has indicated that it plans to issue a final rule prior to that date with an adoption date that is sufficiently in advance of the effective date to minimize compliance burdens. Plan fiduciaries should reach out to their recordkeepers and third-party administrators to discuss future compliance with the rule and allocation of responsibilities.

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Julia Ann Love 216.566.5686 <a href="mailto:Julia.Love@ThompsonHine.com">Julia.Love@ThompsonHine.com</a>

Edward C. Redder 614.469.3258 <a href="mailto:Edward.Redder@ThompsonHine.com">Edward.Redder@ThompsonHine.com</a>

Leah Singleton 404.407.3652 <a href="mailto:Leah.Singleton@ThompsonHine.com">Leah.Singleton@ThompsonHine.com</a>

or any member of our <a href="https://www.thompsonhine.com/services/employee-benefits-amp-executive-compensation">Employee Benefits &amp; Executive Compensation</a> group.

This advisory bulletin may be reproduced, in whole or in part, with the prior permission of Thompson Hine LLP and acknowledgment of its source and copyright. This publication is intended to inform clients about legal matters of current interest. It is not intended as legal advice. Readers should not act upon the information contained in it without professional counsel.

This document may be considered attorney advertising in some jurisdictions.

https://admin.thompsonhine.com/wp-content/uploads/2022/04/DOL_Issues_Interim_Final_Rule_Implementing_SECURE_Act_Requirements_for_Lifetime_Benefit_Illustrations.pdf

DOL Issues Interim Final Rule Implementing SECURE Act Requirements for Lifetime Benefit Illustrations

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