Lifetime Income For Employees Act

I 118TH CONGRESS 1ST SESSION H. R. 3942 To amend the Employee Retirement Income Security Act of 1974 to permit default investment arrangements in annuities, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JUNE 9, 2023 Mr. NORCROSS (for himself and Mr. WALBERG) introduced the following bill; which was referred to the Committee on Education and the Workforce A BILL To amend the Employee Retirement Income Security Act of 1974 to permit default investment arrangements in annuities, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Lifetime Income For 4 Employees Act’’. 5 SEC. 2. DEFAULT INVESTMENT IN ANNUITY CONTRACTS. 6 (a) IN GENERAL.—Section 404(c)(5) of the Em- 7 ployee Retirement Income Security Act of 1974 (29 8 U.S.C. 1104(c)(5)) is amended— 9 (1) in subparagraph (A)— 10 VerDate Sep 11 2014 23:35 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3942.IH H3942 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 3942 IH (A) by inserting ‘‘or subparagraph (C), as 1 appropriate,’’ after ‘‘subparagraph (B)’’; and 2 (B) by inserting ‘‘or in a covered annuity 3 contract’’ after ‘‘by the Secretary’’; and 4 (2) by adding at the end the following: 5 ‘‘(C) COVERED ANNUITY CONTRACT.— 6 ‘‘(i) IN GENERAL.—For purposes of 7 this paragraph, the term ‘covered annuity 8 contract’ means an investment in an annu- 9 ity contract that meets the following re- 10 quirements: 11 ‘‘(I) The annuity contract does 12 not impose a liquidity restriction on 13 the transfer of invested amounts dur- 14 ing the 180-day period beginning on 15 the date of the initial investment in 16 such contract by the participant or 17 beneficiary. 18 ‘‘(II) The fiduciary ensures that 19 each participant or beneficiary is pro- 20 vided notice in writing in accordance 21 with clause (ii). 22 ‘‘(III) The fiduciary allocates not 23 more than 50 percent of any periodic 24 contribution or, immediately after a 25 VerDate Sep 11 2014 23:35 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3942.IH H3942 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 3942 IH rebalancing of account investments, 1 50 percent of the value of the assets 2 of the account, to the annuity con- 3 tract (or, as applicable, to the portion 4 thereof to which a liquidity restriction 5 applies after the 180-day period in 6 subclause (I)). 7 ‘‘(ii) NOTICE REQUIREMENT.—For 8 the purposes of this subparagraph, each 9 participant or beneficiary shall be provided 10 notice in writing in a manner that is rea- 11 sonably designed to be understood by the 12 average plan participant, as follows: 13 ‘‘(I) Not later than 30 days in 14 advance of the initial investment, a 15 notice that includes— 16 ‘‘(aa) an explanation of the 17 circumstances under which assets 18 in the account may be invested 19 on behalf of the participant or 20 beneficiary in the annuity con- 21 tract, including an explanation of 22 the targeted range and maximum 23 amount or percentage of such as- 24 sets to be invested; 25 VerDate Sep 11 2014 23:35 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3942.IH H3942 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 3942 IH ‘‘(bb) an explanation of the 1 rights, and any limitations or re- 2 strictions thereon, of a partici- 3 pant or beneficiary to direct or 4 transfer amounts invested, or to 5 be invested, in an annuity con- 6 tract to other investment alter- 7 natives available under the plan; 8 ‘‘(cc) a general description 9 of the annuity contract, including 10 the duration of guaranteed pay- 11 ments and identification of the 12 insurer; 13 ‘‘(dd) an explanation of how 14 a participant or beneficiary may 15 obtain additional information in 16 writing about their investment al- 17 ternatives; and 18 ‘‘(ee) a description of how to 19 obtain a copy of the annuity con- 20 tract. 21 ‘‘(II) Not later than 30 days be- 22 fore the date of the imposition of a li- 23 quidity restriction described in sub- 24 clause (i)(I), that includes— 25 VerDate Sep 11 2014 23:35 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3942.IH H3942 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 3942 IH ‘‘(aa) a statement explaining 1 that the participant’s or bene- 2 ficiaries’ contributions will short- 3 ly become subject to liquidity re- 4 strictions; 5 ‘‘(bb) an explanation of the 6 rights of the participant or bene- 7 ficiary to direct or transfer 8 amounts to be invested in alter- 9 natives under the plan; and 10 ‘‘(cc) an explanation of how 11 a participant or beneficiary may 12 obtain additional information 13 about their investment alter- 14 natives. 15 ‘‘(iii) DEFINITION OF ANNUITY CON- 16 TRACT.—For purposes of this subpara- 17 graph, the term ‘annuity contract’ means a 18 contract (or provision or feature thereof) 19 that— 20 ‘‘(I) is issued by an insurer quali- 21 fied to do business in a State; and 22 ‘‘(II) provides for the payment of 23 guaranteed benefits annually (or more 24 frequently) for a fixed term or for the 25 VerDate Sep 11 2014 23:35 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3942.IH H3942 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 3942 IH remainder of the life of the partici- 1 pant or beneficiary or the joint lives 2 of the participant and the partici- 3 pant’s designated beneficiary.’’. 4 (b) EFFECTIVE DATE.—The amendments made by 5 subsection (a) shall apply with respect to investments 6 made on or after the date of enactment of this Act. 7 Æ VerDate Sep 11 2014 23:35 Jul 07, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\H3942.IH H3942 kjohnson on DSK79L0C42PROD with BILLS