Method and system for providing employer-sponsored retirement plan

• US 8,429,052 B2
• Filed: 07/18/2006
• Issued: 04/23/2013
• Est. Priority Date: 07/19/2005
• Status: Active Grant

• Current Assignee: Lincoln National Life Insurance Company (Lincoln National Corporation)
• Original Assignee: Lincoln National Life Insurance Company (Lincoln National Corporation)
• Inventors: Herr, Daniel P., Toth, Robert J.
• Primary Examiner(s): MARCUS, LELAND R
• Application Number:
  US11/488,317
• Publication Number:
  US 20070033124A1
• Time in Patent Office: 2,471 Days
• Field of Search: 605/36
• US Class Current: 705/36.R
• CPC Class Codes: G06Q 10/1057 Benefits or employee welfare, e.g. insurance, holiday or retirement packages
• CPC Class Codes: G06Q 40/08 Insurance

Abstract

A computer-implemented method of administering income distributions from an employer-sponsored retirement plan having a participant account value provides an option to a plan participant to elect a lifetime payout funded by at least a portion of the participant'"'"'s account value. The lifetime payout may be funded by a Plan Distributed Annuity (“PDA”) or through the plan. An access period may be provided in the latter case, during which a participant maintains access to, and control over, the account.

Claims

1. The computer-implemented method for use with a computer of the type used to administer an employer-sponsored, defined contribution retirement plan having participant account balances, comprising the steps of:

providing options to a plan participant to elect a lifetime payout funded by at least a portion of the participant'"'"'s account balance, said options including an option to elect lifetime payments paid through the plan, and an option to elect lifetime payments paid through a Plan Distributed Annuity (“

PDA”

);

providing funding and administration of benefit payments under the lifetime payout outside of an annuity contract during a first specified period; and

using the computer;

inputting a lifetime payout election by a participant, said election including either said election for lifetime payments paid through the plan, or for lifetime payments paid through the PDA;

for each plan participant electing a lifetime payout, importing and storing participant data from the plan, said data including data representative of said portion of the participant'"'"'s account balance funding the lifetime payout;

creating and storing a lifetime payout record for said participant;

using said portion of the participant'"'"'s account balance, computing an amount of a periodic benefit payment under the elected lifetime payout; and

if a PDA is elected by the plan participant or administrator;

generating an instruction to withdraw said portion of the participant'"'"'s account balance to purchase a PDA; and

generating an instruction to modify the participant'"'"'s payout record to reflect purchase of the PDA; and

if a PDA is not elected;

establishing an account within the plan for paying periodic distributions to the participant in response to the election of a lifetime payout;

periodically retrieving the plan participant'"'"'s lifetime payout record from storage;

generating an instruction to pay the lifetime payout benefit payment from the account established within the plan; and

recording the payment in the participant'"'"'s lifetime payout record and re-storing said record.

2. The computer-implemented method of claim 1, further comprising the step of providing a guarantee and, using the computer, generating an instruction to pay the lifetime benefit payment pursuant to the guarantee in the event the account established within the plan has insufficient assets to fund the benefit payment.

3. The computer-implemented method of claim 2, further comprising the step of determining a charge to be paid by the participant for the guarantee.

4. The computer-implemented method of claim 3, further comprising the step of deducting the charge from at least one of the participant'"'"'s account balance and the account established within the plan for paying periodic distributions to the participant.

5. The computer-implemented method of claim 3, wherein the step of determining a charge comprises determining a front end charge, and further comprising the step of deducting the front end charge from at least one of the participant'"'"'s account balance and the account established within the plan for paying periodic distributions to the participant.

6. The computer-implemented method of claim 3, wherein the step of determining a charge comprises determining a charge to be deducted from each benefit payment paid to the participant.

7. The computer-implemented method of claim 3, wherein the step of determining a charge comprises the step of determining an asset charge, and further comprising the step of periodically deducting the asset charge from at least one of the participant'"'"'s account balance and the account established within the plan for paying periodic distributions to the participant.

8. The computer-implemented method of claim 1, wherein the step of establishing an account within the plan comprises the step of establishing a variable annuity account to fund the periodic distributions.

9. The computer-implemented method of claim 8, wherein the step of establishing a variable annuity account comprises the steps of maintaining an account value for a defined period of time, and providing the plan participant access to the account value.

10. The computer-implemented method of claim 9, wherein the step of providing the plan participant access to the account value comprises the steps of permitting at least one of withdrawals from and additional deposits to the variable annuity account, and the step of making adjustments to the account value based on said withdrawals and deposits, if any.

11. The computer-implemented method of claim 10, comprising the additional step of establishing a predetermined withdrawal rate for a given withdrawal frequency, and providing a guarantee of continued distributions, provided that withdrawals do not exceed the predetermined withdrawal rate, even if the account value is exhausted.

12. The computer-implemented method of claim 8, further comprising the step of providing a minimum payment guarantee associated with the variable annuity account and the step of, using the computer, setting the amount of the periodic benefit payment to a minimum payment amount if the amount of the payment computed using said portion of the participant'"'"'s account balance is less than the minimum payment amount.

13. The computer-implemented method of claim 1, comprising the additional step of providing at least one of a death benefit and a commuted value.

14. The computer-implemented method of claim 13, wherein the death benefit is equal to an account value of the account established within the plan for paying periodic distributions.

15. The computer-implemented method of claim 13, wherein the commuted value is equal to an account value of the account established within the plan for paying periodic distributions.

16. The computer-implemented method of claim 1, further comprising the step of permitting the plan participant to select investment options for said portion of the participants account balance.

17. The computer-implemented method of claim 16, wherein said investment options include substantially the same options available to the plan participant in an accumulation period under the employer-sponsored, defined contribution retirement plan.

18. The computer-implemented method of claim 1, further comprising the step of providing a long term care benefit, the costs of which are deducted from at least one of the participant'"'"'s account balance and the account established within the plan for paying periodic distributions to the participant.

19. The computer-implemented method of claim 1, further comprising the step of providing a guaranteed minimum payment benefit under the lifetime payout so that periodic benefit payments will not be less than a specified amount.

20. The computer-implemented method of claim 1, further comprising the steps of identifying Internal Revenue Code requirements applicable to the employer-sponsored, defined contribution retirement plan, and administering distributions under the lifetime payout option so as to ensure compliance with said regulations.

21. The computer-implemented method of claim 1, wherein said step of recording payments made under the lifetime payout option is part of a record keeping process used to record other forms of distributions from the employer-sponsored, defined contribution retirement plan.

22. The computer-implemented method of claim 1, further comprising the steps of periodically computing benefits under the lifetime payout option, and reporting the results of the computation to the plan participant.

23. The computer-implemented method of claim 22, wherein said results are reported to the participant through pre-existing plan processes.

24. The computer-implemented method of claim 1, further comprising the steps of providing data relating to the lifetime payout option to pre-existing plan administration processes, including at least one of processes relating to plan termination, plan mergers, changes in plan administrators, changes in investment options, changes in insurance vendors and plan amendments.