Skip to main content

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.

Popular posts from this blog

What are Alternative Investments? 4-Part Introduction

The market has seen a lot of uncertainty in recent years. Because of this, many organizations are looking for new ways to diversify their investment portfolios. Our best-kept “not-so-secret” secret: alternative investments. In this blog, we'll explore alternative investments with a focus on how they can potentially shield your portfolios from downside market volatility. In addition, we'll break down its benefits and risks and whether it could be a good fit for you. Part 1: What are alternative investments? Alternative investments may help diversify your investment portfolios through non-traditional investment strategies. Non-traditional investment options have varying liquidity ranges depending on the strategy and fund structure. Alternative investments are sometimes referred to as alternative assets. According to the Harvard Business School , the seven types of alternative investments are: private equity; private debt; hedge funds; real estate; commodities; collectibles; and s

Section 125 – Cafeteria Plans Overview

A Section 125 plan, or cafeteria plan , allows employees to pay for certain benefits on a pre-tax basis. Employers use these plans to provide their employees with a choice between cash and certain qualified benefits without adverse tax consequences. Paying for benefits on a pre-tax basis reduces the employee’s taxable income and, therefore, reduces both the employee’s and the employer’s tax liability. To receive these tax advantages, a cafeteria plan must comply with the rules of Section 125 of the Internal Revenue Code and related IRS regulations. Under these rules, a Section 125 plan must have a written plan document and can only offer certain qualified benefits on a tax-favored basis. Once an employee makes a Section 125 plan election, they may not change that election until the next plan year, unless the employee experiences a permitted election change event. Also, for highly compensated employees to receive the tax advantages associated with a Section 125 plan, the plan must pass

Employee benefits strategies: 5 budget-friendly ideas

Retirement and employee benefits help create a solid foundation for recruitment and retention. They’re also pivotal in enhancing job satisfaction, boosting productivity, encouraging employee well-being and increasing workplace morale. With the work landscape evolving rapidly, organizations are revisiting their offerings to develop stronger employee benefits strategies.  The first area most small- and mid-size employers investigate is quick, short-term ways to foster company culture. In this blog, we’ll cover budget-friendly ideas to improve your employee benefits initiatives. Think of them as smaller action items that can help you gain a competitive edge. Then, we’ll take a closer look at how customizing your benefits plan can support your new efforts.  1. Promote a healthy work culture  Investing in employee benefit plans is not just about fulfilling a checklist. It's about creating an environment where employees feel supported in both their professional and personal lives. Benefi