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New bill requires income projections in 401(k)s

Legislation introduced by three U.S. senators last week would require 401(k) plan sponsors to inform participating workers of their projected monthly retirement income based on their current account balance.

By Jenny Ivy | Updated on December 07, 2009

Legislation introduced by three U.S. senators last week would require 401(k) plan sponsors to inform participating workers of their projected monthly retirement income based on their current account balance. The measure aims to improve workers’ understanding of their retirement plans and how they can strengthen their preparedness.

U.S. Senators Jeff Bingaman, D-N.M., Johnny Isakson, R-Ga., and Herb Kohl, D-Wis., have proposed the Lifetime Income Disclosure Act, which would require 401(k) plan sponsors to inform participating workers of the projected monthly income they could expect at retirement based on their current account balance. The measure is similar to the Social Security Administration’s annual statements, which are mailed annually to workers, informing them of estimated monthly benefits based on their current earnings.

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