Page 17 - Investment Advisor April/May 2023

3 Annuity-Rule Changes on IRI’s New Wish List

The Insured Retirement Institute has an idea for help- 1 A QLAC Upgrade
ing clients move individual retirement account money The qualified longevity annuity contract is a vehicle
into more types of income annuities. IRI also has propos- that a client can use to put up to $200,000 from an IRA
als for building annuitization options into 401(k) plans or retirement plan account into an annuity with an income
and other employer-sponsored defined contribution stream that’s guaranteed to last for the holder’s entire life-
retirement plans. time. The annuity can’t be tapped until an advanced age,
The Washington-based group has included these ideas typically 85.
in its new 2023 Federal Retirement Security Blueprint. This One QLAC marketing challenge: a product menu based on
means some clients could, for example, soon get a new plain vanilla fixed annuities.
way to use funds they have saved in individual retirement IRI wants to make the menu more interesting by letting
accounts and 401(k) plans. insurers put indexed annuities and variable annuities with
IRI is one of the groups that helped lobby for passage of guaranteed benefits into QLACs.
key financial services provisions included in the Setting Every
Community Up for Retirement Enhancement (Secure) Act 2 In-Plan Annuity Liquidity Rules
and the Secure 2.0 Act. IRI believes that lifetime income annuities would make
One of the ideas in its blueprint, creating national rules for a great “qualified default investment alternative” for retire-
remote online notarizations, was included in a bill, H.R. 1059, ment plan enrollees who have not told the plan how they
that sailed through the House on a voice vote just hours after want to invest their money, because lifetime income annuities
IRI unveiled the blueprint. provide higher returns than many other QDIA options.
House Financial Services Chair Patrick McHenry, R-N.C., One obstacle to using lifetime income annuities that way
emphasized recently, during a committee bill markup meet- is U.S. Department of Labor regulations that require that
ing, that he wants the committee to work in a bipartisan way a participant be able to get to the assets in a QDIA within
to pass bills. McHenry’s focus on getting things done could three months.
make this a good time for IRI and other insurance industry IRI wants Congress to let plans use an annuity that pro-
organizations to pass bills. vides benefit guarantees and locks assets in for longer than
three months as the QDIA for a portion of a retirement plan
Annuity Provisions participant’s contributions.
The IRI blueprint includes a wide range of ideas, including
proposals for requiring all but the smallest employers to 3 Plan Default Distribution Option Rules
enroll workers in retirement plans automatically, allowing Workers who retire need to start taking assets out of
caregivers who leave the workforce temporarily to make their retirement plans.
extra contributions, updating electronic document IRI wants Congress to let the plan sponsors use lifetime
distribution rules and making retirement plans available income annuities as the default asset distribution option, as
to cannabis-based businesses. long as the plans tell the participants about the default annui-
Adobe Stock in-plan annuities. tization option and give the participants a chance to opt out.
Three provisions directly relate to retail annuities or
Stay tuned. —Allison Bell

APRIL/MAY 2023 INVESTMENT ADVISOR 15