Helping Plan Participants Reach Retirement Readiness

September 11, 2020
Helping Plan Participants Reach Retirement Readiness

Having enough resources to retire comfortably is the ultimate goal of most plan participants. Certain SECURE Act provisions aim at assisting them in reaching that retirement readiness.

According to an official at the Employee Benefits Security Administration (EBSA), an objective for companies offering retirement plans is “to help workers and retirees understand how savings translate to retirement income.”  By seeing an estimated monthly dollar amount on benefit statements, plan participants can use the information as a guide for savings and expenses during retirement.

Disclosures Regarding Lifetime Income on Plan Benefit Statements

Section 203 of SECURE Act amends the pension benefit statement rules (under ERISA Section 105) to require benefit statements of plan participants to include a lifetime income disclosure illustrating monthly payments a participant would receive if the total account balance were used to provide lifetime income streams.

Estimated Income for Retirement Plan Participants

On August 18, the Department of Labor announced an interim final rule (IFR) addressing the required disclosure set forth in SECURE Act that defined contribution plans must include two lifetime income illustrations on participants’ benefit statements at least annually – one as a single-life income stream and the other that factors in a survivor benefit. Such illustrations are designed to help employees understand how a retirement plan account balance translates into a monthly income. EBSA is inviting comments on the IFR from interested parties and intends to issue a final rule after sufficiently reviewing comments submitted.   

Model Language and Assumptions to Alleviate Liability

The good news is, to help ease the administrative burden, the rule includes model disclosure language for use on benefit statements along with the assumptions, which, in turn, protect plan fiduciaries, plan sponsors and other persons from liability under ERISA should actual monthly payments in retirement fall short of illustrations. Both will provide consistency among recordkeepers that each are showing and using the same information.

Certain Assumptions for Estimates Are Required

Required assumptions include:

  • Assumed (or stated) commencement date
  • Assumed age (currently 67, which is Social Security full retirement age for most workers) or, actual age, if older
  • Assumed spousal and survivor benefits (assumption that participant is married even if not and, if married, spouse is same age as the participant regardless of spouse’s actual age)
  • Assumed interest rate (10-year constant Treasury rate)
  • Assumed mortality (based on the Internal Revenue Code gender neutral mortality table)

Formulating Estimates Could Be Challenging

This interim final rule is waiting for publication in the Federal Register and will be effective one year after official publication in the Federal Register. With that being said, once effective the new rule will more than likely require plan sponsor recordkeepers and providers to gather more information, including actuarial factors for each plan participant. This could make it difficult to accurately estimate lifetime income. Most recordkeepers will have to adjust their systems to build in the assumptions and produce new benefit statements.

What To Do Next

As soon as the effective date is known, your recordkeeper will determine how it intends to implement the interim rule by the one year deadline. Your Retirement Plan Solutions team at Mariner Wealth Advisors is always here to help you with retirement plan concerns and to help your participants save for retirement.


“DOL Announces Estimated Income Rule for Retirement Plan Participants,” 401kSpecialist.

“DOL Requires 401(k)s to Give Participants Lifetime Income Estimates,”

U.S. Department of Labor Employee Benefits Security Administration Fact Sheet Pension Benefits Statements – Lifetime Income Illustrations

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