Should a participant change jobs or otherwise want to move the guaranteed income investment option to another retirement plan, they may be able to do so.
If the guaranteed income investment option is available on the new platform, the participant should be able to transfer their investment option and preserve the income benefit.
The SECURE Act legislation provides portability provisions that plan fiduciaries can rely on when addressing these concerns. Specifically, Section 109 of the SECURE Act provides that if a plan fiduciary decides to eliminate a guaranteed lifetime income solution, plan participants invested in those solutions can either:
- Make a direct rollover of the amount invested in the guaranteed lifetime income solution2
- Distribute an annuity contract to preserve the guaranteed lifetime income feature offered by the prior solution3
The election to do so must occur on or after the date that is 90 days prior to the date a guaranteed lifetime income solution is no longer authorized to be held as an investment option within the plan.
Solutions that can help
Some insurers may offer an IRA rollover solution to help address the need for a direct rollover of the amount invested in the guaranteed lifetime income solution. These IRA solutions could be used in the event that the participant changes jobs or otherwise loses access to the guaranteed lifetime income solution.
If eligible, a participant may be able to take advantage of an IRA rollover solution that offers an income guarantee. However, this option could have different investment options, fees and features.