Effective 6/30/2022, a new Lifetime Income Illustration will be included in all defined contribution participant statements. This new Lifetime Income Illustration is part of the Department of Labor (DOL) Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. The goal of this new requirement is to help participants view their account balance in terms of how much income it would provide in retirement.
The illustrations will include monthly payments in the form of both a single life annuity (SLA) as well as a qualified joint and 100% survivor annuity (QJSA).
Your participants may notice that the Income Illustrations on the statement does not match My Retire Right Planner on startright.bokf.com. For the statement illustration, the DOL established specific assumptions that are applied to all participants to ensure consistency, some of the key assumptions are:
- Account balances – are assumed to be fully vested and are based on the statement period end date
- Future contributions – are not factored into the illustration
- Loans – are assumed to be paid in full unless they are in default
- Age – participants are assumed to be age 67 unless they are older, then their actual age will be used
- Life expectancy – the unisex (gender neutral) mortality tables are used to determine life expectancy
- Marital Status – participants are assumed to be married to someone who is the same age
- Interest rate – the 10-year constant maturity U.S. Treasury securities yield rate as of 1st day of the month for the statement period ending date (example: March 1 for March 31 statement period)
For your participants that have different circumstances than those outlined in the above assumptions, My Retire Right Planner is an additional resource to help provide a more customized view of their retirement income.
Please feel free to reach out if you have any questions.
Lea Ann Nunley