From: Watkins, Laura [mailto:LSWatkins@sfbcic.com] 

Sent: Monday, April 19, 2010 9:49 AM 

To: EBSA, E-ORI - EBSA 

Subject: RIN 1210-AB33 

Dear Sir or Madame: 

I am writing in response to the DOL’s request for comments concerning life time income 

from retirement plans. I am the 401(k) Plan Administrator for Southern Farm Bureau 

Casualty Insurance Company in Ridgeland, Mississippi. I have been administering our 

401(k) plan for over 20 years. Our plan has 4,000 participants and about $300 million in 

assets. We offer the 401(k) plan in addition to a pension plan that is totally funded by the 

company. 

I would like to provide you with a few thoughts to consider when evaluating annuity 

options in 401(k) plans. Our plan offers an option that I believe is better than an annuity 

option. We allow retirees to leave their money in the plan and draw it out as needed. 

They can set up a recurring monthly distribution. They can stop, start or change the 

amount at any time. Our retirees love the flexibility of this option. The can take 

advantage of our plan’s full menu of investment choices during retirement. This allows 

the retirees to invest with the amount of risk that is appropriate for them. It also allows 

them the flexibility of taking a distribution amount that is appropriate for that time in 

their life. As their life changes (sickness, death of spouse, etc.), they can change their 

distribution amount. 

I’m not sure if our plan’s “take it as you need it” option would meet your definition of 

lifetime income produce. A participant can run out of money. That is generally because 

they never put enough into the plan to begin with. It is not a function of what withdrawal 

options they were offered. 

Just as a point of information, our retirees do not pay a fee for this service. This was part 

of the services we negotiated with our vendor. 

For years we offered annuity options, but no one ever took advantage of the option. As a 

fiduciary of the plan it always made me nervous to even offer annuities. We would 

present a variety of annuity providers to any participant that asked about an annuity. We 

had a list of criteria that we followed to select the vendors (A.M. Best ratings, etc.). All 

of my fiduciary diligence would be for a single point in time, the date the annuity was 

purchased. What if the provider had financial problems 20 year down the road? Would 

my participants still be protected? 

I do not believe that annuities should be forced on plan administrators. Our plan is not 

broken. Please do not fix it. 

Here are my thoughts of some of your questions. 
 Why do so many participants currently opt for a lump-sum distribution and not 

for an annuity or other lifetime payment program? In my experience, a lot of the 

younger employees that terminate service do tend to take the lump-sums. 

Adding annuity options to the plan will not change that practice. If they 

won’t consider rolling their money into an IRA or leaving it in our plan I 

know they won’t take annuity. Very few of our older participants take a 

lump-sum as cash. They take advantage of our “take it as you need it” 

option. 

 What are the advantages for participants and plan sponsors about having a 

lifetime income product inside versus outside of the plan? One advantage is that 

the participant can still control their investment options. They can decide 

how conservative or aggressive they want to invest. Another advantage of 

having the payout option within the plan is the flexibility of changing your 

distribution as your life changes. Health related problems may cause a 

retiree to need additional funds at certain times. With our plan’s flexible 

options the participants can take distributions as they actually need the 

money. 

 Should some form of lifetime income distribution option be required for defined 

contribution plans? No. If so, should that option be the default distribution 

option, and should it apply to the entire account balance? No. 

 Are there differences in the way various demographic groups would view lifetime 

income products that should be taken into account by regulators? Younger 

employees would not even consider the option. 

 What participant education is necessary for the lifetime income products issue and 

how should it be provided? I think all education efforts should be determined 

by the plan sponsor. I know my participants. After doing this for 20 years I 

know what works and what does not. We have worked hard through the 

years to provide our participants with education on the 401(k) Plan. Please 

do not try to force required “education” on plans. More disclosure notices 

will not help participants. They will not read them. 

 Are employers that sponsor both defined benefit and defined contribution plans 

allowing participants to use their defined contribution plan lump-sum payouts to 

"purchase" lifetime income from the defined benefit plan? We don’t allow 

participants to purchase life time products from the pension plan. I do not 

believe any of my participants would even consider this option. 

Please feel free to contact me at (601) 957-4495 if you have any questions. 

Laura S. Watkins, CEBS, SPHR

Vice President, Human Resources

Southern Farm Bureau Casualty Insurance 

Phone (601) 957-4495

Fax (601) 899-4535

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