The Setting Every Community Up for Retirement Enhancement Act (SECURE Act) includes three sections designed to encourage more employers to adopt retirement plans, and it simplifies a few issues that have bedeviled plan sponsors and taxpayers for years.
Among these issues are:
- Whether participants in defined contribution plans will be able to save enough to sufficiently fund their living expenses in retirement;
- Whether participants will be able to assume the risks associated with successfully managing their retirement income; and
- Whether participants will gain a false sense of financial security when viewing their accumulated assets in a defined contribution plan in isolation.
- Conduct objective, analytical research to identify qualified insurers;
- Consider an insurer’s financial capability of fulfilling its obligations under the contract;
- Consider contract costs, including fees and commissions, when assessing contract value, including the contract’s features and benefits and insurer attributes; and
- Make a conclusion based on the above factors that an insurer can fulfill its financial obligations and that the cost of the contract is reasonable.
- Ensuring the insurer is licensed to offer guaranteed life income contracts;
- Ensuring the insurer has not had their license revoked or suspended, has filed audited financial statements according to the laws of the state where it is domiciled, has maintained the necessary financial reserves to satisfy the statutory requirements in every state in which it does business, and is not operating under an order of supervision, rehabilitation or liquidation;
- Confirming that the insurer undergoes a financial examination by the insurance commission of its home state every five years; and
- Requiring that the insurer notifies the fiduciary of any change in circumstances that occur after the above representations have been made which would render those representations untrue at the time a guaranteed life income contract is issued.
