This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

5253 

Vol. 75, No. 21 

Tuesday, February 2, 2010 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

RIN 1545–BJ04 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

29 CFR Parts 2509, 2520 and 2550 

RIN 1210–AB33 

Request for Information Regarding 

Lifetime Income Options for 

Participants and Beneficiaries in 

Retirement Plans 

AGENCY: Employee Benefits Security 

Administration, Department of Labor; 

Internal Revenue Service, Department of 

the Treasury. 

ACTION: Request for information. 

SUMMARY: The Department of Labor and 

the Department of the Treasury (the 

‘‘Agencies’’) are currently reviewing the 

rules under the Employee Retirement 

Income Security Act (ERISA) and the 

plan qualification rules under the 

Internal Revenue Code (Code) to 

determine whether, and, if so, how, the 

Agencies could or should enhance, by 

regulation or otherwise, the retirement 

security of participants in employersponsored retirement plans and in 

individual retirement arrangements 

(IRAs) by facilitating access to, and use 

of, lifetime income or other 

arrangements designed to provide a 

lifetime stream of income after 

retirement. The purpose of this request 

for information is to solicit views, 

suggestions and comments from plan 

participants, employers and other plan 

sponsors, plan service providers, and 

members of the financial community, as 

well as the general public, on this 

important issue. 

DATES: Comments must be submitted on 

or before May 3, 2010. 

ADDRESSES: You may submit written 

comments to any of the addresses 

specified below. Any comment that is 

submitted to either Agency will be 

shared with the other Agency. Please do 

not submit duplicates. 

Department of Labor. Comments to 

the Department of Labor, identified by 

RIN 1210–AB33, by one of the following 

methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: e-ORI@dol.gov. Include RIN 

1210–AB33 in the subject line of the 

message. 

• Mail: Office of Regulations and 

Interpretations, Employee Benefits 

Security Administration, Room N–5655, 

U.S. Department of Labor, 200 

Constitution Avenue, NW., Washington, 

DC 20210, Attention: Lifetime Income 

RFI. 

All submissions received must 

include the agency name and Regulation 

Identifier Number (RIN) for this 

rulemaking. Comments received will be 

posted without change to http:// 

www.regulations.gov and http:// 

www.dol.gov/ebsa, and made available 

for public inspection at the Public 

Disclosure Room, N–1513, Employee 

Benefits Security Administration, 200 

Constitution Avenue, NW., Washington, 

DC 20210, including any personal 

information provided. Persons 

submitting comments electronically are 

encouraged not to submit paper copies. 

Internal Revenue Service. Comments 

to the IRS, identified by REG–148681– 

09, by one of the following methods: 

• Mail: CC:PA:LPD:PR (REG–148681– 

09), Room 5205, Internal Revenue 

Service, P.O. Box 7604, Ben Franklin 

Station, Washington, DC 20044. 

• Hand or courier delivery: Monday 

through Friday between the hours of 8 

a.m. and 4 p.m. to: CC:PA:LPD:PR 

(REG–148681–09), Courier’s Desk, 

Internal Revenue Service, 1111 

Constitution Avenue, NW., Washington, 

DC 20224. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments 

(IRS REG–148681–09). 

All submissions to the IRS will be 

open to public inspection and copying 

in Room 1621, 1111 Constitution 

Avenue, NW., Washington, DC from 9 

a.m. to 4 p.m. 

FOR FURTHER INFORMATION CONTACT: 

Stephanie L. Ward or Luisa GrilloChope, Office of Regulations and 

Interpretations, Employee Benefits 

Security Administration (EBSA), (202) 

693–8500 or Peter J. Marks, Office of 

Division Counsel/Associate Chief 

Counsel (Tax Exempt and Government 

Entities), Internal Revenue Service, 

Department of the Treasury, at (202) 

622–6090. These are not toll-free 

numbers. 

SUPPLEMENTARY INFORMATION: 

A. Background 

The Agencies are issuing this request 

for information in furtherance of their 

efforts to promote retirement security 

for American workers. The Secretary of 

Labor’s overarching vision for the work 

of the Department of Labor is to advance 

good jobs for everyone. Good jobs 

provide wages that support families, 

and rise with time and productivity. 

Good jobs also provide safe and healthy 

working conditions. Finally, good jobs, 

no matter the type or income level, 

provide retirement security. Consistent 

with these objectives, the Department of 

the Treasury strives to promote 

economic growth, stability, and 

economic security, including retirement 

security, for American workers, and 

oversees the federal tax expenditures for 

retirement savings and security. 

Retirement security is provided to 

many workers through defined benefit 

pension plans sponsored by their 

employers. Employers that sponsor 

defined benefit pension plans are 

responsible for making contributions 

that are sufficient for funding the 

promised benefit, investing and 

managing plan assets (as fiduciaries), 

and bearing investment risks because 

the employer, as plan sponsor, is 

required to make enough contributions 

to the plan to fund benefit payments 

during retirement. In addition, when the 

defined benefit pension plan pays (or 

offers to pay) a lifetime annuity, it 

provides (or offers to provide) 

protection against the risk of outliving 

one’s assets in retirement (longevity 

risk). 

Department of Labor data, however, 

show a trend away from sponsorship of 

defined benefit plans, toward 

sponsorship of defined contribution 

plans. The number of active participants 

in defined benefit plans fell from about 

27 million in 1975 to approximately 20 

million in 2006, whereas the number of 

active participants in defined 


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5254 Federal Register / Vol. 75, No. 21 / Tuesday, February 2, 2010 / Proposed Rules 

1The number of active participants in 1975 and 

2006 are not directly comparable because of 

adjustments in the definition of a participant. 

Please see a detailed explanation of the adjustment 

in U.S. Department of Labor, Employee Benefits 

Security Administration, ‘‘Private Pension Plan 

Bulletin Historical Tables and Graphs,’’ February 

2009, p. 1–9. See www.dol.gov/ebsa/pdf/1975- 

2006historicaltables.pdf. 

contribution plans increased from about 

11 million in 1975 to 66 million in 

2006.1

While defined contribution plans 

have some strengths relative to defined 

benefit plans, participants in defined 

contribution plans bear the investment 

risk because there is no promise by the 

employer as to the adequacy of the 

account balance that will be available or 

the income stream that can be provided 

after retirement. Moreover, while 

defined benefit plans are generally 

required to make annuities available to 

participants at retirement, 401(k) and 

other defined contribution plans 

typically make only lump sums 

available. Furthermore, many traditional 

defined benefit plans have converted to 

lump sum-based hybrid plans, such as 

cash balance or pension equity plans, 

and many others have simply added 

lump sum options. Accordingly, with 

the continuing trend away from 

traditional defined benefit plans to 

401(k) defined contribution plans and 

hybrid plans, including the associated 

trend away from annuities toward lump 

sum distributions, employees are not 

only increasingly responsible for the 

adequacy of their savings at the time of 

retirement, but also for ensuring that 

their savings last throughout their 

retirement years and, in many cases, the 

remaining lifetimes of their spouses and 

dependents. 

In recognition of the foregoing, the 

Agencies are considering whether it 

would be appropriate for them to take 

future steps to facilitate access to, and 

use of, lifetime income or other 

arrangements designed to provide a 

stream of income after retirement. This 

includes a review of existing regulations 

and other guidance and consideration of 

whether any such steps would enhance 

the retirement security of participants in 

retirement plans, taking into account 

potential effects on and tradeoffs 

involving other policy objectives. To 

that end, this request for information 

(RFI) sets forth a number of questions 

that are generally organized into 

categories under which the Agencies 

may be able to provide additional 

guidance if appropriate. This RFI also 

includes a number of questions 

pertaining to the economic impact of 

rulemaking, and to impediments beyond 

the statutory requirements, if any. 

Commenters are not limited to these 

questions and are invited to respond to 

all or any subset of the questions, but 

the Agencies request that commenters 

relate their responses to specific 

questions when possible. 

Similar considerations arise when 

participants decide how to take 

retirement distributions from an IRA 

(including an IRA that holds rollover 

distributions from qualified retirement 

plans). Further, participants often elect 

to take lump sum distributions where 

they are available from defined benefit 

plans, which may also be rolled over to 

an IRA. Commenters are encouraged to 

address these contexts as well, 

identifying the particular types of 

arrangements to which their comments 

relate. 

All comments will be considered, and 

comments supported by references to 

empirical data will be particularly 

appreciated. In considering the 

questions set forth in this RFI, 

commenters are encouraged to take into 

account the following studies and 

commentary: 

2009 GAO Report 

In July 2009, the Government 

Accountability Office (GAO) published 

Report GAO–09–642 entitled, ‘‘Private 

Pensions: Alternative Approaches Could 

Address Retirement Risks Faced by 

Workers but Pose Trade-offs.’’ The GAO 

found that workers face a number of 

risks in both accumulating and 

preserving pension benefits. The GAO 

found, in relevant part, that: 

Workers that receive lump-sum 

distributions, in particular, face several risks 

related to how they withdraw, or ‘‘draw 

down’’ their benefits, including: 

• Longevity risk—retirees may draw down 

benefits too quickly and outlive their assets. 

Conversely, retirees may draw down their 

benefits too slowly, unnecessarily reduce 

their consumption, and leave more wealth 

than intended when they die. 

• Investment risk—assets in which 

pension savings are invested may decline in 

value. 

• Inflation risk—inflation may diminish 

the purchasing power of a retiree’s pension 

benefits. 

Commenters are encouraged to consider 

this GAO report in reviewing the issues 

identified in this RFI. This report may 

be accessed at http://www.gao.gov/ 

new.items/d09642.pdf. 

2007 GAO Report 

In November 2007, the GAO 

published Report GAO–08–8 entitled, 

‘‘Private Pensions: Low Defined 

Contribution Plan Savings May Pose 

Challenges to Retirement Security, 

Especially for Many Low-Income 

Workers.’’ The GAO concluded that only 

36 percent of workers participated in a 

current defined contribution plan in 

2004, with the total median account 

balance (for workers with a current or 

former DC plan, including rolled-over 

retirement funds) of only $22,800. The 

median account balance was $50,000 for 

workers age 55 to 64 and $60,600 for 

those age 60 to 64. The report is relevant 

to this RFI because the need for lifetime 

income may be most acute among 

workers who have small but significant 

retirement savings balances. 

Commenters are encouraged to consider 

this GAO report in reviewing the issues 

identified in this RFI. This report may 

be accessed at www.gao.gov/new.items/ 

d088.pdf. 

2003 GAO Report 

In July 2003, the General Accounting 

Office (GAO) published Report GAO– 

03–810 entitled, ‘‘Private Pensions: 

Participants Need Information on Risks 

They Face in Managing Pension Assets 

at and During Retirement.’’ The GAO 

concluded that: 

The decreasing number of employersponsored pension plans that offer only life 

annuities at retirement and the increasing 

percentage of retiring participants who 

choose benefit payouts other than annuities 

suggest that, in the future, fewer retirees may 

receive pension income guaranteed to last 

throughout retirement. The growth in the 

number of DC plans, along with the 

increasing availability of lump sums from DB 

plans, means that retirees will face greater 

responsibility and choices for managing their 

pension and other assets at and throughout 

retirement. Depending on their choices, 

retirees could be at greater risk of outliving 

their pension and retirement savings plan 

assets or ultimately having insufficient 

income to maintain their standard of living 

through their retirement years. 

Such risks underscore the need for 

providing enhanced information and 

education to participants about their 

available payout options, the issues they may 

face in managing retirement assets, and how 

different options may mitigate, or increase, 

these risks. As part of their responsibility, 

retirees will have to weigh certain pros and 

cons of different ways to manage and 

preserve pension assets. Currently, the 

notices that plan sponsors must furnish to 

retiring participants are not sufficient to help 

them choose payout options that suit their 

individual circumstances, while assuring 

adequate levels of such income to the extent 

possible. Our expert panel suggested that 

providing several types of information, such 

as on risks that could affect retirement 

income security, could help retiring 

participants make more informed decisions 

regarding how they balance income and 

expenditures during retirement. 

This report, which did not 

recommend executive branch action, 

nonetheless recommended that the 

Congress may wish to consider 


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Federal Register / Vol. 75, No. 21 / Tuesday, February 2, 2010 / Proposed Rules 5255 

amending ERISA to require plan 

sponsors to provide participants with a 

notice on risks that individuals face in 

managing their income and 

expenditures at and during retirement. 

Commenters are encouraged to consider 

this GAO report in reviewing the issues 

identified in this RFI. This report may 

be accessed at http://www.gao.gov/ 

new.items/d03810.pdf. 

ERISA Advisory Council Reports 

In 2007, the ERISA Advisory 

Council’s Working Group on Financial 

Literacy of Plan Participants and the 

Role of the Employer undertook a study 

of numerous issues relating to 

increasing the financial decision-making 

skills of plan participants. The Working 

Group issued a report containing, 

among others, the following 

recommendation: ‘‘The Working Group 

recommends that the Department of 

Labor expand the reach of [Interpretive 

Bulletin 96–1] by changing and 

updating it. As innovation continues in 

the financial marketplace, educational 

initiatives will need to address items 

heretofore not necessarily addressed in 

96–1. 96–1 needs to address 

information, education, and advice in 

the de-accumulation stage as well as the 

accumulation phase. Further, as 

innovation continues in this area, 96–1 

needs to be continually updated.’’ 

Commenters are encouraged to consider 

this report in reviewing the issues 

identified in this RFI. This report may 

be accessed at http://www.dol.gov/ebsa/ 

publications/AC-1107a.html. 

In 2008, the ERISA Advisory 

Council’s Working Group on the Spend 

Down of Defined Contribution Assets at 

Retirement undertook a study on the 

types of guidance that could help plan 

sponsors and plan participants make 

better informed decisions regarding plan 

investment and insurance vehicles that 

provide periodic or lifetime 

distributions. The Working Group 

issued a report containing, in relevant 

part, the following recommendations: 

(1) Expand the reach of Interpretive 

Bulletin 96–1 by adapting it to the 

spend down phase; (2) clarify that 

products which are eligible qualified 

default investment alternatives while 

participants are actively participating in 

the plan will continue to so qualify; (3) 

encourage, authorize, endorse and 

facilitate plan communications that use 

retirement income replacement 

formulas based on final pay and other 

reasonable assumptions in employee 

benefit statements on an individual 

participant basis; and (4) enhance plan 

sponsor and participant education by 

publishing and regularly updating 

information about the distribution 

options available to participants in 

defined contribution plans. Commenters 

are encouraged to consider this report in 

reviewing the issues identified in this 

RFI. This report may be accessed at 

www.dol.gov/ebsa/publications/ 

2008ACreport3.html. 

B. Request for Information 

The purpose of this notice is to solicit 

views, suggestions and comments from 

plan participants, plan sponsors, plan 

service providers and members of the 

financial community, as well as the 

general public, to assist the Agencies in 

evaluating what steps, if any, they could 

or should take, by regulation or 

otherwise, to enhance the retirement 

security of participants in employersponsored retirement plans and IRAs by 

facilitating access to, and use of, lifetime 

income or other arrangements designed 

to provide a stream of lifetime income 

after retirement. To facilitate 

consideration of the issues, the Agencies 

have set forth below a number of 

matters and specific questions with 

respect to which views, suggestions, 

comments and information are 

requested. In addition to addressing any 

or all of the matters and questions 

referred to below, interested persons are 

encouraged to address any other matters 

they believe to be germane to the 

Agencies’ consideration of lifetime 

annuities and similar lifetime income 

issues, particularly as they relate to 

defined contribution plans and defined 

benefit plans that distribute benefits as 

lump sums. 

General 

1. From the standpoint of plan 

participants, what are the advantages 

and disadvantages for participants of 

receiving some or all of their benefits in 

the form of lifetime payments? 

2. Currently the vast majority of 

individuals who have the option of 

receiving a lump sum distribution or ad 

hoc periodic payments from their 

retirement plan or IRA choose to do so 

and do not select a lifetime income 

option. What explains the low usage 

rate of lifetime income arrangements? Is 

it the result of a market failure or other 

factors (e.g., cost, complexity of 

products, adverse selection, poor 

decision-making by consumers, desire 

for flexibility to respond to unexpected 

financial needs, counterparty risk of 

seller insolvency, etc.)? Are there steps 

that the Agencies could or should take 

to overcome at least some of the 

concerns that keep plan participants 

from requesting or electing lifetime 

income? 

3. What types of lifetime income are 

currently available to participants 

directly from plans (in-plan options), 

such as payments from trust assets held 

under a defined benefit plan and 

annuity payments from insurance 

contracts held under a defined 

contribution or defined benefit plan? 

4. To what extent are the lifetime 

income options referenced in question 3 

provided at retirement or other 

termination of employment as opposed 

to being offered incrementally during 

the accumulation phase, as 

contributions are made? How are such 

incremental or accumulating annuity 

arrangements structured? 

5. To what extent are 401(k) and other 

defined contribution plan sponsors 

using employer matching contributions 

or employer nonelective contributions 

to fund lifetime income? To what extent 

are participants offered a choice 

regarding such use of employer 

contributions, including by default or 

otherwise? 

6. What types of lifetime income or 

other arrangements designed to provide 

a stream of income after retirement are 

available to individuals who have 

already received distributions from their 

plans (out-of-plan options), such as IRA 

products, and how are such 

arrangements being structured (fixed, 

inflation adjusted, or other variable, 

immediate or deferred, etc.)? Are there 

annuity products under which plan 

accumulations can be rolled over to an 

individual retirement annuity of the 

same issuer to retain the annuity 

purchase rights that were available 

under the plan? 

7. What product features have a 

significant impact on the cost of 

providing lifetime income or other 

arrangements designed to provide a 

stream of income after retirement, such 

as features that provide participants 

with the option of lifetime payments, 

while retaining the flexibility to 

accelerate distributions if needed? 

8. What are the advantages and 

disadvantages for participants of 

selecting lifetime income payments 

through a plan (in-plan option) as 

opposed to outside a plan (e.g., after a 

distribution or rollover)? 

9. What are the advantages and 

disadvantages from the standpoint of 

the plan sponsor of providing an in-plan 

option for lifetime income as opposed to 

leaving to participants the task of 

securing a lifetime income vehicle after 

receiving a plan distribution? 

10. How commonly do plan sponsors 

offer participants the explicit choice of 

using a portion of their account balances 

to purchase a lifetime annuity, while 

leaving the rest in the plan or taking it 

as a lump sum distribution or a series 

of ad hoc distributions? Why do some 


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plan sponsors make this partial annuity 

option available while others do not? 

Would expanded offering of such partial 

annuity options—or particular ways of 

presenting or framing such choices to 

participants—be desirable and would 

this likely make a difference in whether 

participants select a lifetime annuity 

option? 

11. Various ‘‘behavioral’’ strategies for 

encouraging greater use of lifetime 

income have been implemented or 

suggested based on evidence or 

assumptions concerning common 

participant behavior patterns and 

motivations. These strategies have 

included the use of default or automatic 

arrangements (similar to automatic 

enrollment in 401(k) plans) and a focus 

on other ways in which choices are 

structured or presented to participants, 

including efforts to mitigate ‘‘all or 

nothing’’ choices by offering lifetime 

income on a partial, gradual, or trial 

basis and exploring different ways to 

explain its advantages and 

disadvantages. To what extent are these 

or other behavioral strategies being used 

or viewed as promising means of 

encouraging more lifetime income? Can 

or should the 401(k) rules, other plan 

qualification rules, or ERISA rules be 

modified, or their application clarified, 

to facilitate the use of behavioral 

strategies in this context? 

12. How should participants 

determine what portion (if any) of their 

account balance to annuitize? Should 

that portion be based on basic or 

necessary expenses in retirement? 

13. Should some form of lifetime 

income distribution option be required 

for defined contribution plans (in 

addition to money purchase pension 

plans)? If so, should that option be the 

default distribution option, and should 

it apply to the entire account balance? 

To what extent would such a 

requirement encourage or discourage 

plan sponsorship? 

14. What are the impediments to plan 

sponsors’ including lifetime income 

options in their plans, e.g., 401(k) or 

other qualification rules, other federal or 

state laws, cost, potential liability, 

concern about counterparty risk, 

complexity of products, lack of 

participant demand? 

15. What are the advantages and 

disadvantages of approaches that 

combine annuities with other products 

(reverse mortgages, long term care 

insurance), and how prevalent are these 

combined products in the marketplace? 

16. Are there differences across 

demographic groups (for example men 

vs. women) that should be considered 

and reflected in any retirement security 

program? Can adjustments for any 

differences be made within existing 

statutory authority? 

Participant Education 

The Department of Labor issued 

Interpretive Bulletin 96–1 (29 CFR 

2509.96–1) to clarify that the provision 

of investment education, as described in 

the Bulletin, will not be considered the 

provision of ‘‘investment advice,’’ which 

would give rise to fiduciary status and 

potential liability under ERISA for plan 

participants’ and beneficiaries’ 

investment decisions. 

17. What information (e.g., fees, risks, 

etc.) do plan participants need to make 

informed decisions regarding whether to 

select lifetime income or other 

arrangements designed to provide a 

stream of income after retirement? 

When and how (i.e., in what form) 

should it be provided? What 

information currently is provided to 

participants, who typically provides it, 

and when and how is it provided to 

them? 

18. Is there a need for guidance, 

regulatory or otherwise, regarding the 

extent to which plan assets can be used 

to pay for providing information to help 

participants make informed decisions 

regarding whether to select lifetime 

income or other arrangements designed 

to provide a stream of income after 

retirement, either via an in-plan or outof plan option? 

19. What specific legal concerns do 

plan sponsors have about educating 

participants as to the advantages and 

disadvantages of lifetime income or 

other arrangements designed to provide 

a stream of income after retirement? 

What actions, regulatory or otherwise, 

could the Agencies take to address such 

concerns? 

20. To what extent should plans be 

encouraged to provide or promote 

education about the advantages and 

disadvantages of lifetime annuities or 

similar lifetime income products, and 

what guidance would be helpful to 

accomplish this? 

Disclosing the Income Stream That Can 

Be Provided From an Account Balance 

ERISA section 105 requires defined 

contribution plans to furnish to each 

participant an individual benefit 

statement, at least annually, that 

includes the participant’s ‘‘accrued 

benefits,’’ i.e., the individual’s account 

balance. 

21. Should an individual benefit 

statement present the participant’s 

accrued benefits as a lifetime income 

stream of payments in addition to 

presenting the benefits as an account 

balance? 

22. If the answer to question 21 is yes, 

how should a lifetime stream of income 

payments be expressed on the benefit 

statement? For example, should 

payments be expressed as if they are to 

begin immediately or at specified 

retirement ages? Should benefit 

amounts be projected to a future 

retirement age based on the assumption 

of continued contributions? Should 

lifetime income payments be expressed 

in the form of monthly or annual 

payments? Should lifetime income 

payments of a married participant be 

expressed as a single-life annuity 

payable to the participant or a joint and 

survivor-type annuity, or both? 

23. If the answer to question 21 is yes, 

what actuarial or other assumptions 

(e.g., mortality, interest, etc.) would be 

needed in order to state accrued benefits 

as a lifetime stream of payments? If 

benefit payments are to commence at 

some date in the future, what interest 

rates (e.g., deferred insurance annuity 

rates) and other assumptions should be 

applied? Should an expense load be 

reflected? Are there any authoritative 

tools or sources (online or otherwise) 

that plans should or could use for 

conversion purposes, or would the plan 

need to hire an actuary? Should caveats 

be required so that participants 

understand that lifetime income 

payments are merely estimates for 

illustrative purposes? Should the 

assumptions underlying the 

presentation of accrued benefits as a 

lifetime income stream of payments be 

disclosed to participants? Should the 

assumptions used to convert accounts 

into a lifetime stream of income 

payments be dictated by regulation, or 

should the Department issue 

assumptions that plan sponsors could 

rely upon as safe harbors? 

24. Should an individual benefit 

statement include an income 

replacement ratio (e.g., the percentage of 

working income an individual would 

need to maintain his or her preretirement standard of living)? If so, 

what methodology should be used to 

establish such a ratio, such as preretirement and post-retirement inflation 

assumptions, and what are the 

impediments for plans to present the 

ratio in a meaningful way to 

participants on an individualized basis? 

401(k) and Other Plan Qualification 

Rules 

Income Tax Regulations that apply 

specifically to lifetime annuities 

include: 26 CFR 1.401(a)–11, 26 CFR 

1.401(a)–20, 26 CFR 1.401(a)(9)–1 

through 26 CFR 1.401(a)(9)–9, 26 CFR 

1.417(a)(3)–1, and 26 CFR 1.417(e)–1. 


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25. How do the 401(k) or other plan 

qualification rules affect defined 

contribution plan sponsors’ and 

participants’ interest in the offering and 

use of lifetime income? Are there 

changes to those rules that could or 

should be made to encourage lifetime 

income without prejudice to other 

important policy objectives? 

26. Could or should any changes be 

made to the rules relating to qualified 

joint and survivor annuities and spousal 

consents to encourage the use of lifetime 

income without compromising spousal 

protections? 

27. Should further guidance clarify 

the application of the qualified joint and 

survivor annuity rules or other plan 

qualification rules to arrangements in 

which deferred in-plan insurance 

annuities accumulate over time with 

increasing plan contributions and 

earnings? 

28. How do the required minimum 

distribution rules affect defined 

contribution plan sponsors’ and 

participants’ interest in the offering and 

use of lifetime income? Are there 

changes to those rules that could or 

should be made to encourage lifetime 

income without prejudice to other 

important policy objectives? In 

particular, how are deferred annuities 

that begin at an advanced age 

(sometimes referred to as longevity 

insurance) affected by these rules? Are 

there changes to the rules that could or 

should be considered to encourage such 

arrangements? 

29. 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? Could or should any actions be 

taken to facilitate such arrangements? 

Should plans be encouraged to permit 

retirees who previously took lump sums 

to be given the option of rolling it back 

to their former employer’s plan in order 

to receive annuity or other lifetime 

benefits? 

Selection of Annuity Providers 

The Department of Labor’s regulation 

29 CFR 2550.404a–4 contains a 

fiduciary safe harbor for the selection of 

annuity providers for the purpose of 

benefit distributions from defined 

contribution plans. 

30. To what extent do fiduciaries 

currently use the safe harbor under 29 

CFR 2550.404a–4 when selecting 

annuity providers for the purpose of 

making benefit distributions? 

31. To what extent could or should 

the Department of Labor make changes 

to the safe harbor under 29 CFR 

2550.404a–4 to increase its usage 

without compromising important 

participant protections? What are those 

changes and why should they be made? 

32. To what extent could or should 

the safe harbor under 29 CFR 

2550.404a–4 be extended beyond 

distribution annuities to cover other 

lifetime annuities or similar lifetime 

income products? To which products 

should or could the safe harbor be 

extended? 

ERISA Section 404(c) 

ERISA section 404(c) and 29 CFR 

2550.404c–1 provide defined 

contribution plan fiduciaries with 

limited relief from the fiduciary 

responsibility provisions of ERISA 

where a participant or beneficiary 

exercises control over the assets in his 

or her account. 

33. To what extent are fixed deferred 

lifetime annuities (i.e., incremental or 

accumulating annuity arrangements) or 

similar lifetime income products 

currently used as investment 

alternatives under ERISA 404(c) plans? 

Are they typically used as core 

investment alternatives (alternatives 

intended to satisfy the broad range of 

investments requirement in 29 CFR 

2550.404c–1) or non-core investment 

alternatives? What are the advantages 

and disadvantages of such products to 

participants? What information 

typically is disclosed to the participant, 

in what form, and when? To what extent 

could or should the ERISA 404(c) 

regulation be amended to encourage use 

of these products? 

34. To what extent do ERISA 404(c) 

plans currently provide lifetime income 

through variable annuity contracts or 

similar lifetime income products? What 

are the advantages and disadvantages of 

such products to participants? What 

information about the annuity feature 

typically is disclosed to the participant, 

in what form, and when? To what extent 

could or should the ERISA 404(c) 

regulation be amended to encourage use 

of these products? 

Qualified Default Investment 

Alternatives 

ERISA section 404(c)(5) provides that, 

for purposes of ERISA section 404(c)(1), 

a participant in a defined contribution 

plan will be treated as exercising control 

over the assets in his or her account 

with respect to the amount of 

contributions and earnings if, in the 

absence of an investment election by the 

participant, such assets are invested by 

the plan in accordance with regulations 

of the Department of Labor. The 

Department of Labor’s regulation 29 

CFR 2550.404c–5 describes the types of 

investment products that are qualified 

default investment alternatives under 

ERISA section 404(c)(5). 

35. To what extent are plans using 

default investment alternatives that 

include guarantees or similar lifetime 

income features ancillary to the 

investment fund, product or model 

portfolio, such as a target maturity fund 

product that contains a guarantee of 

minimum lifetime income? What are the 

most common features currently in use? 

Are there actions, regulatory or 

otherwise, the Agencies could or should 

take to encourage use of these lifetime 

income features in connection with 

qualified default investment 

alternatives? 

Comments Regarding Economic 

Analysis, Regulatory Flexibility Act, and 

Paperwork Reduction Act 

Executive Order 12866 (EO 12866) 

requires an assessment of the 

anticipated costs and benefits of a 

significant rulemaking action and the 

alternatives considered, using the 

guidance provided by the Office of 

Management and Budget. In addition, 

the Regulatory Flexibility Act (RFA) 

may require the preparation of an 

analysis of the economic impact on 

small entities of proposed rules and 

regulatory alternatives. For this purpose, 

the Agencies consider a small entity to 

be an employee benefit plan with fewer 

than 100 participants. The Paperwork 

Reduction Act (PRA) requires an 

estimate of how many ‘‘respondents’’ 

will be required to comply with any 

‘‘collection of information’’ requirements 

contained in regulations and how much 

time and cost will be incurred as a 

result. 

The Agencies in this section of the 

RFI are requesting comments that may 

contribute to any analyses that may 

eventually need to be performed under 

EO 12866, RFA, and PRA, both 

generally and with respect to specific 

areas identified in questions 36 through 

39. 

36. What are the costs and benefits to 

a plan sponsor of offering lifetime 

annuities or similar lifetime income 

products as an in-plan option? Please 

quantify if possible. 

37. Are there unique costs to small 

plans that impede their ability to offer 

lifetime annuities or similar lifetime 

income products as an in-plan option to 

their participants? What special 

consideration, if any, is needed for these 

small entities? 

38. Would making a lifetime annuity 

or other lifetime income product the 

default form of benefit payment have an 

impact on employee contribution rates? 

If so, in which direction and why? 


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5258 Federal Register / Vol. 75, No. 21 / Tuesday, February 2, 2010 / Proposed Rules 

39. For plans that offer lifetime 

annuities or similar lifetime income 

products, what percentage of eligible 

workers elect to annuitize at least some 

of their retirement assets and what 

percentage elect to annuitize all of their 

assets? 

Signed at Washington, DC, this 27th day of 

January 2010. 

Phyllis C. Borzi, 

Assistant Secretary, Employee Benefits 

Security Administration, Department of 

Labor. 

Signed at Washington, DC, this 27th day of 

January 2010. 

Nancy J. Marks, 

Division Counsel/Associate Chief Counsel, 

Tax Exempt and Government Entities, 

Internal Revenue Service, Department of the 

Treasury. 

Signed at Washington, DC, this 26th day of 

January 2010. 

J. Mark Iwry, 

Senior Advisor to the Secretary, Deputy 

Assistant Secretary for Retirement and Health 

Benefits, Department of the Treasury. 

[FR Doc. 2010–2028 Filed 2–1–10; 8:45 am] 

BILLING CODE P 

DEPARTMENT OF TRANSPORTATION 

Pipeline and Hazardous Materials 

Safety Administration 

49 CFR Part 107 

[Docket No. PHMSA–2009–0201 (HM–208H)] 

RIN 2137–AE47 

Hazardous Materials Transportation; 

Registration and Fee Assessment 

Program 

AGENCY: Pipeline and Hazardous 

Materials Safety Administration 

(PHMSA), DOT. 

ACTION: Notice of Proposed Rulemaking 

(NPRM). 

SUMMARY: PHMSA is proposing to adjust 

the statutorily-mandated registration 

and fee assessment program for persons 

who transport, or offer for 

transportation, certain categories and 

quantities of hazardous materials. 

PHMSA’s proposal would provide that, 

for registration years beginning in 2010– 

2011, the annual fee to be paid by those 

registrants not qualifying as a small 

business or not-for-profit organization 

would increase from $975 (plus a $25 

administrative fee) to $2,975 (plus a $25 

administrative fee). The proposed fee 

increase is necessary to fund the 

national Hazardous Materials 

Emergency Preparedness (HMEP) grants 

program at its authorized level of 

approximately $28,000,000. 

DATES: Submit comments by March 4, 

2010. 

ADDRESSES: You may submit comments 

identified by DOT DMS Docket Number 

PHMSA–2009–0201 by any of the 

following methods: 

• Fax: 202–493–2251. 

• Mail: Dockets Management System; 

U.S. Department of Transportation, 

Dockets Operations, M–30, Ground 

Floor, Room W12–140, 1200 New Jersey 

Avenue, SE., Washington, DC 20590– 

0001. 

• Hand Delivery: U.S. Department of 

Transportation, Dockets Operations, M– 

30, Ground Floor, Room W12–140, 1200 

New Jersey Avenue, SE., Washington, 

DC, between 9 a.m. and 5 p.m., Monday 

through Friday, except Federal holidays. 

• Federal Rulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

Instructions: Include the agency name 

and docket number PHMSA–2009–0201 

(HM–208H) or Regulatory Identification 

Number (RIN) RIN 2137–AE47 for this 

rulemaking at the beginning of your 

comment. All comments received will 

be posted without change to http:// 

www.regulations.gov including any 

personal information provided. Persons 

wishing to receive confirmation of 

receipt of their comments must include 

a self-addressed stamped postcard. 

Docket: You may review the public 

docket through the Internet at http:// 

www.regulations.gov or in person at the 

Dockets Operations office at the above 

address (See ADDRESSES). 

FOR FURTHER INFORMATION CONTACT: Mr. 

David Donaldson, Office of Hazardous 

Materials Planning and Analysis, 

PHMSA, (202) 366–4484, and Ms. 

Deborah Boothe or Mr. Steven Andrews, 

Office of Hazardous Materials 

Standards, PHMSA, (202) 366–8553. 

SUPPLEMENTARY INFORMATION: 

I. Background 

Since 1992 PHMSA has conducted a 

national registration program under the 

mandate in 49 U.S.C. 5108 for persons 

who offer for transportation or transport 

certain hazardous materials in 

intrastate, interstate, or foreign 

commerce. The purposes of the 

registration program are to gather 

information about the transportation of 

hazardous materials, and to fund the 

Hazardous Materials and Emergency 

Preparedness (HMEP) grants program 

and additional related activities. See 49 

U.S.C. 5108(b), 5116, 5128(b). PHMSA 

may set the annual registration fee 

between a minimum of $250 and 

maximum of $3,000. See 49 U.S.C. 

5108(a)(2), 5108(g)(2)(A). 

Since 2006, the annual registration fee 

has been set at $250 (plus a $25 

processing fee) for small businesses and 

not-for-profit organizations and $975 

(plus a $25 processing fee) for all other 

registrants. See 49 CFR 107.612(d). 

Because PHMSA had accumulated a 

surplus following a prior adjustment in 

2000 (see 65 FR 7297, 7309 [Feb. 14, 

2000]), notwithstanding a temporary 

reduction between 2003 and 2006, since 

Fiscal Year 2008, we have been able to 

fully fund the obligation limit of 

$28,318, 000 in the Consolidated 

Appropriations Act of 2008 (Pub. L. 

110–116 [121 Stat. 1295], November 13, 

2007), and the Omnibus Appropriations 

Act, 2009 (Pub. L. 111–8 [123 Stat. 945], 

March 11, 2009). However, that surplus 

has now been reduced to $1,500,000, 

and it is necessary to adjust registration 

fees in order to collect additional 

monies in the 2010–2011 and following 

registration years and fully fund the 

current authorization and expected 

budget requests of $28.3 million for 

Fiscal Years beginning in 2010. This can 

be done by leaving the annual 

registration fee at $250 (plus a $25 

processing fee) for those persons who 

are a small business or not-for-profit 

organization and increasing to $2,975 

(plus a $25 processing fee) the annual 

fee paid by all other persons required to 

register. 

II. HMEP Grants Program 

A. Purpose and Achievements of the 

HMEP Grants Program 

The HMEP grants program, as 

mandated by 49 U.S.C. 5116, provides 

Federal financial and technical 

assistance to States and Indian tribes to 

‘‘develop, improve, and carry out 

emergency plans’’ within the National 

Response System and the Emergency 

Planning and Community Right-ToKnow Act of 1986 (Title III), 42 U.S.C. 

11001 et seq. The grants are used to: 

(1) Develop, improve, and implement 

emergency plans; (2) train public sector 

hazardous materials emergency 

response employees to respond to 

accidents and incidents involving 

hazardous materials; (3) determine flow 

patterns of hazardous materials within a 

state and between states; and (4) 

determine the need within a state for 

regional hazardous materials emergency 

response teams. 

The HMEP grants program encourages 

the growth of the hazardous materials 

planning and training programs of state, 

local, and tribal governments by 

limiting the Federal funding to 80 

percent of the cost a state or Indian tribe 

incurs to carry out the activity for which 

the grant is made. See 49 U.S.C. 5116(e). 


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