On Aug. 18 the Department of Labor’s (DOL) Employee Benefits Security Administration released an interim final rule (IFR) on the lifetime income illustrations defined contribution plans will be required to provide participants annually. The rule was a SECURE Act requirement and, following a 60-day comment period, the interim final rule will take effect 12 months after its publication.
Any retirement income model is based on a mix of hard data, assumptions and projections; the IFR spells out what sponsors need to cover in their illustrations:
Assumed account balance: Current balance, i.e., not adjusted for anticipated contributions or earnings.
Assumed commencement date: Regardless of the participant’s anticipated retirement date, the illustration must assume that the monthly income benefit will start on the last day of the benefit starting period.
Assumed age: The required assumption is that the participant will be age 67 on the benefit’s starting date. If the