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On December 20, 2019, President Trump signed the Setting Every Community Up for Retirement Enhancement (SECURE) Act into law. This bipartisan legislation, which had been in the works for several years, seeks to further promote access to retirement income within the 401(k) market.

An important aspect of this act is a “safe harbor” provision for the selection and use of annuity products underwritten by insurance companies. (This provision was added to the Employee Retirement Income Security Act (ERISA) of 1974 in Section 404(e) and is called “Safe Harbor for Annuity Selection.”) The safe harbor was considered essential, given that many plan sponsors have been reluctant to use in-plan annuities due to possible liability issues should the insurer selected to underwrite an in-plan income annuity later become insolvent.

While it was hoped that the safe harbor provision would provide an impetus for more defined-contribution plans to begin introducing in-plan annuity options, this has yet to occur. Certainly, the onset of the global pandemic in early 2020 acted as a brake on new initiatives, but a long-ingrained reluctance on the part of plan sponsors to introduce retirement income solutions is likely the larger factor.


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