Post by Admin/YBB on Sept 11, 2022 9:08:28 GMT -6
The Secure Act 2019 requires 401k/403b plans to provide lifetime retirement income illustrations in statements. The first efforts will meet the letter but not the spirit of the law. It seems that most plans will just provide how much lifetime income annuity the current balance could buy if the participant was of retirement age TODAY. This may not be meaningful at all as it ignores potential future contributions, higher accumulations due to interest credits alone, changes in rate environments, etc. Of course, any assumptions made on those may also be controversial.
One way could be to use estimates similar to the ones used for deferred-income annuity (bought earlier for income to start later). At least some accepted methodologies exist for those.
Another way could be similar to how the insurance industry handles cash value illustrations. So, multiple assumed rates (2+) could be used and contributions may be assumed at the current level and with some assumed escalation. That may lead to 4+ possible retirement income streams that may be more helpful.
Whatever is done would involve some controversy.
money.yahoo.com/401-k-statements-retirement-savings-181646060.html
waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/SECURE%20Act%20section%20by%20section.pdf
One way could be to use estimates similar to the ones used for deferred-income annuity (bought earlier for income to start later). At least some accepted methodologies exist for those.
Another way could be similar to how the insurance industry handles cash value illustrations. So, multiple assumed rates (2+) could be used and contributions may be assumed at the current level and with some assumed escalation. That may lead to 4+ possible retirement income streams that may be more helpful.
Whatever is done would involve some controversy.
money.yahoo.com/401-k-statements-retirement-savings-181646060.html
waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/SECURE%20Act%20section%20by%20section.pdf