With the shift to 401(k) plans, American workers have become increasingly responsible for putting savings into and managing their retirement investments. However, studies have found that many Americans are not saving enough, and they are unsure how quickly or slowly to draw down their savings in their retirement years.
The Lifetime Income Disclosure Act, S.868, introduced once again by Isakson and Murphy, would require 401(k) plan sponsors to inform participating workers of the projected monthly income they could expect at retirement based on their current account balance.
“American workers need access to the best available information about their investment choices and exactly how much they will have earned when they retire,” said Isakson. “This information not only helps them to plan, but promotes increased savings while they are still working. Many workers count on defined contribution plans such as 401(k)s in their retirement planning, and this legislation will encourage participants to think of their 401(k) investments as a vehicle for lifetime income.”
The Lifetime Income Disclosure Act is patterned on the
By providing similar information for 401(k) plans, the Lifetime Income Disclosure Act would give American workers a more complete snapshot of their projected income in retirement.
Specifically, under the Act, defined contribution plans subject to Employee Retirement Income Security Act (ERISA) of 1974 – including 401(k) plans – would be required annually to inform participants of how their account balance would translate into a monthly income stream based on age at retirement and other factors.
To ensure there is no material burden or potential liability on employers who voluntarily sponsor 401(k) plans, the legislation directs the
Companion legislation was introduced in the
Several industry groups are urging support for the Lifetime Income Disclosure Act, including
Isakson and Murphy previously introduced the legislation in the 114th
Full text of the legislation is available here.( https://www.isakson.senate.gov/public/_cache/files/b0b338a6-ee14-4346-92be-fe79b4bca702/BAI17290.pdf).