New Treasury Department rules on using deferred annuities within target-date funds as part of a defined contribution plan shouldn’t be viewed as excluding the department’s consideration of other lifetime income options in those plans, said J. Mark Iwry, deputy assistant secretary for retirement and health policy.
The Treasury Department guidelines, issued in December, covered only deferred annuities offered within target-date funds. The rules left in a footnote brief remarks about other lifetime income options — guaranteed lifetime withdrawal benefits and guaranteed minimum withdrawal benefits — as something the department and IRS “are considering whether or not to provide guidance” on these options.
“We didn’t want to hold up issuance of the regulations (on deferred annuities) pending resolving the unique issues” of the guaranteed benefit withdrawal products, Mr. Iwry said Monday, referring to guaranteed withdrawal products embedded in target-date funds within DC plans. “This is not a negative message.”
Mr. Iwry made his comments in response to a question at the DC Opportunities and Challenges conference in New York conducted by the Defined Contribution Institutional Investment Association.
Because guaranteed withdrawal benefit products are different from standard fixed or variable annuities, the Treasury Department and IRS must “look at how they fit into qualified (DC) plans,” Mr. Iwry said.
“We are very cognizant that they are popular in the marketplace,” he said. “Because they are different, we are giving special focus” to them.” Mr. Iwry added that the department hasn’t set a timetable for when, or if, new regulations would be issued.
