Products December 15, 2014

DCIIA Offers Clarification of Longevity Annuity Rules

The DCIIA has released a FAQ document about new regulations for qualifying longevity annuity contracts in retirement plans.
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In its newly released document, “Qualifying Longevity Annuity Contracts: Answers to Frequently Asked Questions (FAQs),” the Defined Contribution Institutional Investment Association (DCIIA) provides insight into recently announced regulations that make longevity annuities accessible to the defined contribution (DC) and individual retirement account (IRA) markets.

Prior to the issuance of regulations announced by the Internal Revenue Service (IRS) in July, longevity annuities were, as a practical matter, not accessible to DC and IRA investors due to Internal Revenue Code rules that require distributions from a DC or IRA account to begin by age 70½, which is prior to the age longevity annuities are designed to begin income payments, the DCIIA notes. With the new regulations, qualifying longevity annuity contracts (QLACs) are exempt from required minimum distribution (RMD) rules within prescribed parameters.

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The FAQs resource seeks to provide clarification of common questions that plan sponsors and their advisers may have regarding these new regulations. Among others, the document answers such questions as:

  • What is a “qualifying longevity annuity contract” (QLAC) as referred to in the regulations?
  • When are the regulations effective? Do they apply to existing annuity contracts?
  • What defined contribution plan types are allowed to offer a QLAC?
  • Do contract holders have to wait until age 85 before payments from the QLAC can begin?
  • What happens if a contract holder accidentally exceeds this limit? Will the dollar limit increase over time and, if so, how?
  • Are there any reporting requirements for a plan sponsor or plan provider with regard to the QLAC?
  • These final regulations address QLACs, but do they have any impact on other annuities offered in-plan or in other retirement accounts, such as fixed annuities or variable annuities with “guaranteed minimum withdrawal benefit” (GMWB) riders?
  • Do these regulations apply to defined benefit plans?

The document is available here.

Products December 15, 2014

Prudential Retirement Creates Gibraltar Ventures

The new Gibraltar Ventures organization will explore, develop and invest in new strategies to advance retirement and financial security, according to Prudential.
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Prudential Retirement, a business unit of Prudential Financial, has launched Gibraltar Ventures as a separate organization focused on developing new investment ideas and business strategies.

Christine Marcks, president of Prudential Retirement, says Gibraltar Ventures “will build on Prudential Retirement’s significant successes over the past several years and complement our existing efforts to help more people prepare for their financial futures with confidence.”

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Asked to elaborate on the work Gibraltar will do, Marcks shared a written statement with PLANADVISER:

“Prudential Retirement has a successful track record of growing our core portfolio of businesses and developing new sources of revenue ahead of market demand, as we did with IncomeFlex and Pension Risk Transfer strategies. Gibraltar Ventures will build on that foundation to explore unique solutions that will help overcome behavioral and financial obstacles to long term savings and retirement security for our clients. It’s likely that Gibraltar Ventures will also explore ideas beyond the current scope of our three core businesses. What’s different about Gibraltar Ventures is that we are creating a stand-alone organization under the direction of a senior leader who is responsible for both incubating and investing in potentially disruptive ideas. We expect Gibraltar Ventures to both challenge and complement our current innovation efforts.”

George Castineiras, head of Prudential Retirement’s defined benefit, defined contribution and nonqualified executive benefits business, has been tapped to lead Gibraltar Ventures. James McInnes, a member of the Total Retirement Solutions leadership team since 2009, will be promoted to head of Total Retirement Solutions, filing Castineiras’ previous role. Both Castineiras and McInnes will begin their new roles on January 1, 2015, and report directly to Marcks.

“I am pleased to launch Gibraltar Ventures under George’s leadership,” Marcks adds. “George’s experience in this industry and passion for innovation make him a natural choice to launch this effort.”

The strategy for Total Retirement Solutions business will remain unchanged, according to Prudential.

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