Reps. Donald Norcross, D-N.J., and Tim Walberg, R-Mich., reintroduced legislation Tuesday, the Lifetime Income for Employees (LIFE) Act of 2022, that would allow annuities to be a default investment option in employer-sponsored 401(k) plans.
The bill builds on the Setting Every Community Up for Retirement Enhancement (Secure) Act by allowing retirement plan sponsors to use annuities as qualified default investment alternatives, or QDIAs, for a portion of contributions made by participants who have not made investment selections.
The LIFE Act addresses certain requirements in the QDIA regulatory safe harbor "that prevent employers from being able to benefit from the safe harbor if they include annuities as part of their retirement plan's default investment," said Thasunda Brown Duckett, CEO of TIAA, in a Tuesday letter to the lawmakers.
Increasingly, Duckett said, "retirement plan participants rely on their plan's default product as their long-term investment strategy. While many participants mistakenly believe the default option provides a guaranteed retirement income, most QDIA products do not."
By amending the QDIA safe harbor, Duckett continued, "the LIFE Act will encourage more employers to adopt annuities as part of their default offering so that more Americans will be able to transition seamlessly from saving for retirement to benefitting from a guaranteed income stream when they retire."
The LIFE Act also builds upon "the Secure Act provision that enhanced the safe harbor on which plan sponsors rely when choosing an annuity provider for their retirement plan," Duckett said.
