Incentives

Members of Congress and officials from the Departments of Treasury and Labor are working on options that would provide sources of guaranteed lifetime income to participants in 401k and other pension plans. At a high level, it is clear that the Obama Administration wants to create structures and incentives for: Increasing retirement savings. Providing people with the ability to turn those accumulated savings into streams of income that last through retirement. A trial program that would involve...

The Department of Labor has suspended a Bush Administration rule that would have allowed financial advisors to provide investment advice to their 401k customers. The Pension and Protection Act of 2006 contains a provision that allows financial advisors who manage company 401k plans to provide investment guidance to the 401k plan participants. The DOL suspended the rule out of concern for apparent regarding conflict of interest . The concern is that the advisors who sell products may have...

The Pension Protection Act of 2006 created tax incentives for the creation of hybrid long-term care insurance policies. The Act also provides the basis for a tax free exchange of a life insurance or annuity contract for a long-term care policy. The exchange would be conducted through a Section 1035 exchange . Consumers and their financial advisors will be able to conduct such exchanges beginning in 2010. The details are complicated, but there is a good, in-depth article referenced below that...

This past weekend President Obama discussed his "common sense" steps to reform and simplify the system of retirement savings in the United States. President Obama seeks to extend incentives and simplified savings vehicles to the 78 million Americans who do not have access to a retirement savings plan through their employer. Some of the President's proposed changes include: The ability to put unused leave time, sick pay and tax refunds directly into retirement savings accounts. Simplified 401k...