Benefits December 17, 2024

BlackRock Employees Among Early LifePath Paycheck Users

The asset manager has made its TDF with an annuity option the QDIA for its roughly 8,500 employees.

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BlackRock Inc. is putting its retirement-income product to the test with an important participant base: its own employees.

In April, BlackRock launched its LifePath Paycheck with six plan sponsors, while nine more were in the process of implementing it. The world’s largest asset manager’s name put weight behind an emerging defined contribution product category that offers users the option, at an advanced age, to annuitize a portion of retirement plan contributions.

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On Monday, one of the architects of that product, Anne Ackerley, posted the news that BlackRock’s employees will now be using it: The target-date series will be the plan’s qualified default investment alternative and available to about 8,500 U.S. employee plan participants at the firm, a spokesperson confirmed.

“Today marks an exciting milestone for the many, many colleagues who worked to bring LifePath Paycheck to the BlackRock retirement savings plan!” Ackerley, now a senior adviser to BlackRock’s retirement business, wrote on LinkedIn. “Every worker deserves to feel more secure about their financial future, so knowing BlackRock retirement savings plan participants now have access to this retirement income solution makes me incredibly proud.”

Ackerley had been head of the retirement group at the firm, but stepped down from that role in May amid a restructuring.

Robert Crothers, head of U.S. retirement at BlackRock, chimed in as well on his LinkedIn account, writing: “Our #1 financial fear as Americans is outliving our savings. Now, BlackRock retirement savings plan participants will have more peace of mind knowing that when they retire, they’ll have access to an income stream they can count on. For life.”

The LifePath Paycheck is invested like a TDF until participants reach the age of 55, when about 10% of the balance is allocated to lifetime income investment “units” that will reach about 30% of the portfolio by age 65 if not annuitized. Starting at age 59.5, a participant will have an “annuity purchase option” window that lasts until they turn 71, during which they can purchase an annuity that creates a guaranteed paycheck in retirement.

BlackRock’s retirement savings plan had about $4.1 billion in assets and 14,416 overall participants, as of December 31, 2023, according to its most recent Form 5500 filing.

Ask the Experts December 17, 2024

How Can Sponsors Recover Overpayments to 403(b) Plans?

Experts from Groom Law Group and CAPTRUST answer questions concerning retirement plan administration and regulations.

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Q: We maintain an ERISA 403(b) plan, in which we have historically recouped any overpayments made to plan participants without any issues. However, we understand that recent guidance has been issued regarding such recoupment. Can we continue to recoup such overpayments? If we can, are there any restrictions on doing so under the latest guidance?

Kimberly Boberg, Kelly Geloneck, Emily Gerard and David Levine, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

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A: You can still recoup overpayments made to plan participants or beneficiaries. However, there are restrictions on such recoupment for overpayments that qualify as an “inadvertent benefit overpayment.”

The IRS recently released Notice 2024-77, providing interim guidance on the treatment of inadvertent benefit overpayments under the SECURE 2.0 Act of 2022. In the notice, the IRS clarified that recouping overpayments is now optional in most circumstances (before SECURE 2.0, plan sponsors were generally required to take corrective action).

However, the guidance under the notice is limited to Internal Revenue Code implications, meaning the notice did not provide guidance on the changes made to the Employee Retirement Income Security Act’s Section 206(h), which now involves restrictions on the methods used to recoup inadvertent benefit overpayments. These restrictions apply to any ERISA plan (including ERISA 403(b) plans) but not to governmental plans.

Under these new restrictions, when recouping inadvertent benefit overpayments, plan sponsors must not:

  • Reduce future payments of non-decreasing annuities by more than 10% of the overpayment each calendar year;
  • Seek more than a 10% reduction in future periodic payments under a non-decreasing annuity;
  • Seek interest or other collection costs or fees with the overpayment;
  • Use a collection agency or include any threat of litigation when seeking to collect the overpayment;
  • Collect an overpayment made to a participant from a spouse or other beneficiary; or
  • Collect an overpayment if the first overpayment is made more than three years before written notice is provided of the error, except in the case of fraud or misrepresentation by the participant.

Overpayment recipients may contest the recoupment under the plan’s claims procedures, and the responsible plan fiduciary may consider a recipient’s hardship when determining the amount to recover from the recipient.

In the meantime, as we anticipate guidance on ERISA Section 206(h), we advise speaking to your counsel on the methods used to recoup overpayments to ensure you are in compliance.


NOTE: This feature is to provide general information only, does not constitute legal advice and cannot be used or substituted for legal or tax advice.

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