New Tax Rules Seek to Help Employers Provide Retirement Plans with Lifetime Income Options, in BenefitsLink’s NewsletterMarch 14, 2012
Joan Disler, Chair of the Firm's National Employee Benefits Steering Committee, in the New Jersey office, Michelle Capezza, a Member of the Firm in the Employee Benefits practice, in the New York office, and David Green, Counsel in the Employee Benefits practice, in the New York office, cowrote "New Tax Rules Seek to Help Employers Provide Retirement Plans with Lifetime Income Options."
Following is an excerpt:
Over the past several years, there has been a continuing shift away from employer-provided defined benefit pension plans toward defined contribution plans, such as 401(k) plans, that do not typically provide for payments in the form of income for life. Government agencies have been examining how this shift has imposed increased responsibility on Americans to manage their own retirement security.
The White House Council of Economic Advisers has concluded that, while lifetime income products (i.e., annuities) can mitigate the risk that retirees will outlive their retirement savings, there are several regulatory barriers to offering these products. In response to this finding, on February 2, 2012, the Department of the Treasury ("Treasury") and the Internal Revenue Service ("IRS") issued an initial package of proposed regulations and revenue rulings intended to remove impediments to providing annuities under defined contributions plans, such as 401(k) plans.
For the full text, read the attorneys' advisory on this topic.