Sec. 222. Lifetime income safe harbor
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Section 404 of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1104 ), as amended by sections 105 and 221(b), is amended by adding at the end the following: With respect to the selection of a lifetime retirement income contract as part of an individual account plan, a fiduciary will be deemed to satisfy the requirements of subsection (a)(1)(B) with respect to the selection of an insurer and lifetime retirement income contract if the fiduciary engages in an objective, thorough, and analytical search for the purpose of identifying insurers from which to purchase lifetime retirement income contracts and appropriately concludes that— at the time of the selection, the insurer is financially capable of satisfying its obligations under the lifetime income contract; and the cost (including fees, surrender penalties, and commissions) of the selected lifetime retirement income contract is reasonable in relation to the benefits and product features of the contract and the administrative services to be provided under such contract.
A fiduciary meets the requirements of paragraph (1)(A) if the fiduciary meets all of the following conditions: The fiduciary obtains written representations from the insurer that— the insurer is licensed to offer lifetime retirement income contracts; the insurer, at the time of selection and for each of the immediately preceding 10 years— operates under a certificate of authority from the Insurance Commissioner of its domiciliary state that has not been revoked or suspended; has filed financial statements in accordance with the laws of its domiciliary state under applicable statutory accounting principles; maintains reserves that satisfy all the statutory requirements of all States where the insurer does business; and is not operating under an order of supervision, rehabilitation, or liquidation; the insurer undergoes, at least every 5 years, a financial examination (within the meaning of the law of the State in which the insurer is domiciled) by the insurance commissioner of the domiciliary State (or any representative, designee, or other party approved thereby); if, following the issuance of the representations described in clauses
(i)through (iii), there is any change that would preclude the insurer from making such representations at the time of issuance of the lifetime retirement income contract, the insurer will inform the fiduciary that the fiduciary can no longer rely on one or more of the representations; and meet such other requirements specified by the Secretary by regulation. The fiduciary has not received the notification described in clause
(iv)of subparagraph
(A)and has no other facts that would cause the fiduciary to question the representations described in clauses
(i)through
(iii)of subparagraph (A). The fiduciary inquires about additional protections that might be available through a State guaranty association for the lifetime retirement income contract. The fiduciary obtains evidence from the insurer that, not more than 1 year prior to the time of selection, the insurer has obtained written confirmation from the insurance commissioner of the domiciliary State of such insurer that, at the time the confirmation is issued, the insurer met the conditions of clauses
(i)and
(ii)of subparagraph (A). For purposes of this subsection, the time of selection is— the time that the insurer and contract are selected for distribution of benefits to a specific participant or beneficiary; or the time that the insurer and contract are selected to provide benefits at future dates to participants or beneficiaries, but only if the selecting fiduciary periodically reviews the continuing appropriateness of the conclusion described in paragraph (1)(A). For purposes of paragraph (3)(B), a fiduciary is not required to review the appropriateness of the conclusion under paragraph (1)(A) before or after the purchase of any contract for specific participants or beneficiaries. A fiduciary will be deemed to have conducted a periodic review of the financial capability of the insurer if the fiduciary obtains the written representations described in clauses
(i)through
(iii)of paragraph (2)(A) on an annual basis, unless, in the interim, the fiduciary becomes aware of facts that would cause the fiduciary to question such representations. For purposes of this subsection— the term insurer means an insurance company, insurance service, or insurance organization qualified to do business in a State and includes affiliates of such companies to the extent the affiliate is licensed to offer lifetime retirement income contracts; and the term lifetime retirement income contract means an annuity contract or a contract (or provision or feature thereof) that provides a participant fixed or variable benefits for a fixed term or the remainder of the life of the participant or the joint lives of the participant and the designated beneficiary of the participant. Nothing in this subsection shall be construed to establish minimum requirements or the exclusive means for a fiduciary to satisfy the fiduciary duties under subsection (a)(1)(B). Nothing in this subsection shall be construed to require a fiduciary to select the lowest cost contract. A fiduciary may consider the value, including features and benefits of the contract and attributes of the insurer, in conjunction with the contract’s cost. Attributes of the insurer that may be considered may include, without limitation, the issuer’s financial strength. .
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Sec. 222
Lifetime income safe harbor
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