So, he continued, “if a 25-year-old has $20,000 in their account, it tells them what that amount would buy a 67-year-old. Now in my opinion, that’s not going to be particularly helpful, and will be confusing.”
Labor “is working on a final regulation,” Reish said, but it hasn’t been sent to the White House yet for review by the Office of Management and Budget. “That review could take a couple months. The process is behind schedule for providing the [lifetime income] information on quarterly statements” for Dec. 31.
As a result, Reish explained to ThinkAdvisor in a separate email, “the delivery of the illustrations to participants could be delayed to after the March 31 quarter or even after the June 30 quarter to allow time to review and digest the final regulation and to make any needed programming changes.”
Reish noted that while a final lifetime income statement rule is a priority for Labor, the recent ESG proposed regulation sent to OMB by Labor “was prioritized even higher.”
A final lifetime income rule “will definitely be to the OMB before the end of the year and hopefully a couple months before that, eg., by the end of October, so that it can be published in the Federal Register before the end of the year,” Reish said.
Labor received feedback from the private sector on how to improve the rule, Reish relayed. “If the DOL believes the feedback would improve the rule, within the context of the statute, it will issue a final regulation with those changes. It’s possible, but probably unlikely, that the DOL could finalize the rule without changes.”
In late July, Labor issued a set of FAQs “that basically said you don’t have to get that first one out until the end of a quarter within the next 12 months — so that would be the end of the quarter by June 30 of next year,” Reish explained.
The FAQ also set out that even though the Secure Act “mandates these [lifetime income statement] disclosures, you can also provide other disclosures because we know some recordkeepers have been giving retirement income projections for years now and we don’t want participants to lose that continuity,” Reish said.
Campbell added during the webcast that the delay in issuing a final rule suggests Labor “may be revisiting some of these decisions from the interim final rule,” noting the rule is “flawed as it is.”