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Along with their current account balance, two lifetime income illustrations must now be included once a year. This is intended to help your plan participants understand their current account balance in terms of what it means for them at retirement so they can be better prepared.
When is this required to start?
The Act’s interim final rule was issued on 9/18/21 and the first illustration must be provided within 12 months of that date. The start date will depend on the type of accounts included in your plan.
What illustrations are required?
The following will be provided regardless of the participant’s actual marital status:
What assumptions are used for the illustrations?
Age: 67 (or actual age, if older)
Interest rate: 10-year Constant Maturity Treasury rate (10-year CMT) as of the first business day of the last month of the statement period. The 10-year CMT approximates the rate used by the insurance industry to price immediate annuities.
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