IRI to DOL: Don’t Undermine Annuity Access in 401(k) Plans
The Insured Retirement Institute is urging the U.S. Department of Labor (DOL) to scrap its plans to withdraw a long-standing safe harbor regulation that IRI says could disrupt the inclusion of annuities into workplace retirement plans.
RELATED – DOL Eliminates Annuity Safe Harbor Final Rule
The Labor Department has proposed to eliminate various rules it cited as redundant and no longer necessary, but IRI says withdrawing this safe harbor regulation would create unintended consequences, disrupting fiduciary practices that are currently working effectively.
In comments filed today, IRI said that the proposed withdrawal of a long-standing regulatory safe harbor provision for the selection of annuity providers for benefit distributions from individual account retirement plans could, “unintentionally lead to reluctance in offering lifetime income options, which would be contrary to the goals of the SECURE Act and SECURE 2.0 in promoting guaranteed retirement income.”
On July 1, 2025, the Employee Benefits Security Administration posted in the Federal Register a direct final rule (DFR) to remove 29 CFR 2550.404a-4 from the Code of Federal Regulations.
In the post, the DOL said the reason behind the move is that “The regulatory safe harbor became unnecessary in 2019 when Congress amended ERISA to add a more streamlined fiduciary safe harbor covering the same activity. Although the statutory safe harbor did not technically nullify or repeal the regulatory safe harbor, its existence offers an unnecessary and inefficient alternative and may inadvertently be a trap for the unwary. This action improves the daily lives of the American people by reducing unnecessary, burdensome, and costly Federal regulations.”
IRI said that the regulatory safe harbor, established under the Pension Protection Act of 2006, provides fiduciaries with a clear and comprehensive standard for selecting both annuity providers and contracts. IRI noted that a statutory safe harbor enacted under the SECURE Act of 2019 primarily addresses the financial viability of insurers, while the regulatory safe harbor encompasses broader fiduciary duties regarding both the provider and the annuity contract itself.
“Retaining the Regulation’s safe harbor will help ensure that fiduciaries have access to well-understood and time-tested guidance,” wrote Emily Micale, Director, Regulatory Affairs at IRI. “Many plan sponsors and service providers have developed internal procedures, oversight processes, and fiduciary practices based on the safe harbor framework established by the Regulation. These standards continue to provide value by reinforcing prudent selection criteria, promoting consistent practices, and reducing ambiguity in the application of ERISA’s fiduciary duties.”
IRI also said that maintaining both safe harbors affords fiduciaries flexibility to choose the compliance pathway best suited to their plan design, participant demographics, and product offerings.
Additionally, IRI noted that some fiduciaries may find greater comfort and confidence following their established fiduciary processes under the regulatory safe harbor when making lifetime income options available to their participants.
“IRI strongly supports efforts to ensure that regulatory standards are clear, consistent, and supportive of retirement income security,” Micale concluded. “Retaining the Regulation’s safe harbor would serve these goals and avoid unnecessary disruption to fiduciary practices that are currently working effectively.”
The notice in the Federal Register said the final rule is to become effective September 2, 2025, “unless significant adverse comments are received by July 31, 2025. Significant adverse comments are ones which oppose the rule and raise, alone or in combination, a serious enough issue related to each of the independent grounds for the rule that a substantive response is required.”
If significant adverse comments are received, notification will be published in the Federal Register before the effective date either withdrawing the rule or issuing a new final rule which responds to significant adverse comments.
IRI is the leading trade association for the retirement income industry, representing the full supply chain of insured retirement strategies.
SEE ALSO:
• IRI Reveals Top Retirement Legislation Priorities for 2025
• Industry Voices Raise Alarms Over EBSA Practices in Latest Hearing
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
