The SECURE passed in 2020 requires sponsors of 401(k) and similar plans must annually disclose to plan participants an estimate of the monthly amount that their account balance would pay in the form of:
- A life annuity with equal payments over the participant's lifetime.
- A qualified joint and 100 percent survivor annuity with equal payments over the joint lives of the participants and a spouse.
The participant-disclosure requirement takes effect on Sept. 18, 2021, and applies to retirement plan statements sent to participants (typically on a quarterly basis) after that date.
The disclosure is intended to help employees determine their readiness to retire. It also is expected to encourage employees to consider annuitization of their retirement assets, meaning using some or all of their 401(k) funds to purchase a lifetime annuity. A lifetime income annuity is a contract with an insurance company that allows purchasers to convert a portion of their retirement savings into a predictable lifetime income stream.
Read Temporary Implementing FAQs from the DOL here.