Dive Brief:
- Today, a growing number of plan sponsors/employers are evaluating guaranteed lifetime income options for their defined contribution plans, such as 401(k) plans. With that in mind, the Institutional Retirement Income Council (IRIC), a non-profit think tank for the retirement income planning community, is offering a free paper on portability solutions.
- The paper, “In-Plan Guaranteed Lifetime Income: Debunking Portability Myths,” provides detailed answers to a dozen frequently asked questions that plan sponsors have about portability - the ability to transfer a retirement plan balance to another employer's or individual's plan after leaving a job - when evaluating in-plan retirement income solutions
- Michael Westhoven, business development leader, lifetime income solutions at DST Retirement Solutions, and an IRIC advisor who co-authored the paper, said portability is frequently cited as an obstacle to offering strong retirement solutions due to the widely-held misconception that portability options aren't feasible.
Dive Insight:
IRIC questions include:
- Why is portability important and what creates the need for it?
- What exactly is being “ported” for guaranteed lifetime income products and what is required to accomplish portability?
- What are a plan sponsor’s options if the recordkeeper they are moving to does not have their income product on the platform?
- Can IRA rollovers be used for portability?
- Are there fees associated with moving a guarantee?
Westhoven says that portability is no longer a barrier. Solutions and options are widely available today, although they may not be well recognized. He adds that much has changed over the past decade now that product designs, industry standards and new technology are all working together to help participants keep their guaranteed benefits.