For the first time, the statements must include illustrations of the monthly payments you would receive if your current plan account balance was used to purchase an annuity. This new requirement is part of the SECURE Act passed by Congress in December 2019. Congress intended that employees will see the illustrations and realize that their lump sum account balance may not produce high enough monthly income to last their lifetime. This, in turn, will persuade workers to increase their retirement plan savings rate.

This article provides an explanation of this new requirement by the Department of Labor (DOL). While the DOL has provided model language for the annuity illustration, some critics of the new requirement believe that the model language is too complicated for an “average” employee to understand, or it may be ignored altogether. If you have any questions about this new statement, be sure to contact your Stout Bowman advisor.

The above summary and the linked article are copyright © 2022, Ed Slott and Company, LLC Reprinted from The Slott Report, 13 Jun 2022, with permission. Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article.