May 30, 2019

Fred Reish Quoted in Retirement Income Journal on SECURE Act

Los Angeles partner Fred Reish was quoted in Retirement Income Journal in an article titled “Is the SECURE Act Too Weak to Make a Difference?” The article discussed the expected passage of the SECURE Act, a retirement reform bill that would provide a 'safe harbor' for selecting an annuity provider for a 401(k) plan.

The new legislation will make it less risky, legally, for plan sponsors to add annuities as plan options; it will promote savings adequacy by raising the limits of “auto-escalation”; and it will address the plan coverage gap among small firms by allowing them to join “open multiple-employer plans.”

The article discusses the possibility that the bills might create loopholes that lead to adverse unintended consequences.

“One of the criticisms of SECURE is that some states are less rigorous in their oversight of insurance companies and, as a result, some weaker insurance companies will be able to qualify under the bill’s ‘checklist’ approach,” Fred said. “While that’s a possibility, I doubt that it will happen because the plan fiduciaries must still decide whether to include the annuities or GMWBs [guaranteed minimum withdrawal benefits] in their plans. So far, at least, the 401(k) recordkeepers, who by and large, determine who is on their platforms, have only used large, financially strong insurance companies… usually the insurance company affiliated with the recordkeeper. I don’t see the recordkeepers allowing weak insurance companies on their platforms.”

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