Plan participants are interested in ways to overcome their fear of outliving their retirement assets, and the SECURE Act contained provisions that make it easier to offer solutions that address these concerns. Learning more about these solutions can enable plans to better meet the needs of their participants, by offering ways to help them better prepare for and live in retirement.

Schedule an appointment

The role of a fiduciary

Sponsoring a retirement plan is one of the most important roles that an employer plays, and with it comes a tremendous amount of responsibility to the plan — fiduciary responsibility being one of the most significant. Failure to meet these responsibilities has serious consequences, including the possibility of being held personally liable to plan participants to restore any losses, as well as restore any profits made through improper use of the plan assets. However, the Employee Retirement Income Security Act of 1974 (ERISA) has provided clear guidance to help plan fiduciaries along the way.

Fiduciary responsibility differs depending on whether the plan is subject to ERISA or is a non-ERISA plan.

ERISA plans require fiduciaries to:

  • Act for the exclusive purpose of providing benefits to participants and their beneficiaries and defraying reasonable expenses of administering the plan
  • Act with the care, skill, prudence and diligence under the circumstances that another person familiar with such matters would also use in a similar situation
  • Diversify the investments of the plan in order to minimize the risk of large losses, unless it is clearly wise not to do so
  • Act in accordance with the documents and instruments governing the plan consistent with provisions of Titles I and IV of ERISA

Non-ERISA plans require fiduciaries to:

  • Look to state constitutional law, state statutory law and common law to determine requirements and best practices for fulfilling fiduciary responsibilities

Investment selection and in-plan guarantees

There is not an enhanced fiduciary standard when it comes to selecting a guaranteed lifetime income solution as an investment in a retirement plan lineup, but there are some important considerations to keep in mind. The existing fiduciary standard is outlined below, as are the steps to be taken that specifically relate to in-plan guarantees.

Expand all

In order for plan fiduciaries to take advantage of the protections of ERISA Section 404(c), the plan must meet the following requirements:

  • The plan must be an individual account plan
  • The plan provides participants with an opportunity to exercise control over assets within their own account
  • The plan allows for participants to choose from a broad range of investment alternatives

ERISA Section 404(c) provides relief from breach of fiduciary responsibility where participants are allowed to direct their own investments and the many requirements enabling participants to make informed investment decisions are satisfied. Specifically, where participants in a defined contribution plan are allowed to direct the investment of the assets in their account, the plan fiduciary may avoid liability for losses resulting from investment decisions made by participants who are exercising control over their own plan accounts if the plan complies with all 404(c) requirements.

Selecting a broad range of investment alternatives can be a daunting task; many plan fiduciaries may even seek third-party guidance to make this decision. The overall goal of a broad range of investments is to allow participants to make whatever investment decisions are most appropriate for them based on their retirement goals and objectives. The alternatives must be:

  • Broad enough to allow investment options to affect their potential return
  • Adequately diversified with different risk and return characteristics to allow them to achieve a balanced portfolio1

When deciding whether to add a guaranteed lifetime income solution to an investment lineup, it's important for plan fiduciaries to:

  • Know and understand the demographics of your employees
  • Know and understand the retirement goals and objectives of your employees
  • Know whether your employees would be open to learning about how guaranteed lifetime income solutions work
  • Know whether your employees have an appetite to use an in-plan guarantee to overcome retirement income challenges associated with longevity
  • Remember that there is no requirement to select the lowest cost solution; consider the cost (including fees and commissions) of the product offered by the insurer in relation to the benefits, product features and administrative services to be provided

The new safe harbor

Plan fiduciaries want to set their employees up for success, but they may be seeking more guidance in how to properly navigate their fiduciary responsibility in selecting a guaranteed lifetime income solution.

The SECURE Act addresses that hesitancy by introducing a new safe harbor that affords greater fiduciary protection for the selection of the insurer supporting the guaranteed lifetime income solution.

In order to take advantage of the SECURE Act Safe Harbor, a plan fiduciary must:

  • Engage in an objective, thorough and analytical search for the purpose of identifying insurers from which to purchase guaranteed lifetime income solutions
  • Consider the financial capability of insurers to satisfy its obligations under the guarantees of the solution
  • Consider the cost (including fees and commissions) of the product offered by the insurer in relation to the benefits, product features and administrative services to be provided
  • Mitigate fiduciary responsibility by requesting and receiving written documentation from the insurer that reflects their ability to meet their financial obligations
  • Conclude that the relative cost is reasonable2


This white paper breaks down key provisions of the SECURE Act that impact guaranteed lifetime income products.

This white paper gives employers information to help them choose a qualified retirement plan (QRP).

[1] 29 C.F.R. 2550.404c-1(b)(3).
[2] 29 C.F.R. 2550.404a-4.