Annuities Are Likely Coming to Your 401(k). Should You Use Them?
April 24, 2019 by David Blanchett
Annuities may be coming to your 401(k) plan in the future.
Driving this potential change is legislation working its way through Congress–the Setting Every Community up for Retirement Enhancement, or Secure, Act–that is getting bipartisan support and was passed by the House’s Ways & Means Committee earlier this month.
Among other things, the bill would reduce the fiduciary liability for 401(k)-plan sponsors when selecting annuity providers. Higher fiduciary liability is one reason employers have been hesitant to offer annuities as a 401(k)-plan option for employees–worried, in part, about liability if they choose an insurer to administer the annuity payments and that insurer later fails to pay claims. Only about 5% of 401(k) plans offer some kind product that guarantees income for life, according to one recent survey.