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Fiduciary safe harbor for selection of lifetime income provider

The Setting Every Community Up for Retirement Enhancement (SECURE) Act provides a safe harbor for plan fiduciaries who select a guaranteed retirement income contract, which is defined as an annuity contract for a fixed term or providing for systematic payments guaranteed by the provider to be made over the life, life expectancy or joint lives or life expectancies of a participant and beneficiary.



Retirement plan fiduciaries will be deemed to have acted prudently and will be eligible for the new safe harbor protection if they engage in and document the following process:


  • objective, thorough and analytical search for an annuity provider;

  • consideration of all costs, benefit features and terms of the contract;

  • obtain written assurances from the provider of compliance with all federal and state laws and regulations governing lifetime income solutions, including state insurance laws;

  • as a result of the analysis, the plan fiduciaries should be able to conclude that the provider has the financial strength to fulfill all its obligations under the contract; and

  • the cost of the contract is reasonable (the SECURE Act does not require that fiduciaries select the lowest cost provider).


Annuities may not be appropriate for all plans, but interested plan fiduciaries now have a safe harbor if they wish to consider including them.



If you have any questions, or would like to begin talking to a retirement plan advisor, please get in touch by email or by calling (800) 388-1963.

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