Is there a technical difference between an annuity option that is offered by an employer once an employee reaches retirement age and an annuity option that is actually part of a 401k plan and available to all employees regardless of age?
Yes, there are very big difference which are fairly involved.
At a high level, in-plan annuities involve annuity options selected by the employer and actually offered within a 401k plan. There are very sensitive fiduciary issues for the employer or plan sponsor (becuase they take responsibility for making sure that the option provided is suitable) and there are tax, portability and other issues for employees.
An annuity option outside of a 401k plan but through an employer is simply an option that is there for employees once they leave the company (retire, change employers, etc).
There certainly does not seem to be any downside to simply asking your employer about it.
That said, in-plan annuities are still not very common. This will likely change over the next several years.
Probably more likely at this point that an in-plan annuity option would be provided by a larger employer (500 or 1000+ employees). This is the part of the market where some early adoption has taken place.
In any event, get some info from your employer if it is there. Shop around for info and for financial advisors who deal with annuities. There is absolutely no need to rush into anything.
tom replied on Permalink
In-Plan Annuities
Yes, there are very big difference which are fairly involved.
At a high level, in-plan annuities involve annuity options selected by the employer and actually offered within a 401k plan. There are very sensitive fiduciary issues for the employer or plan sponsor (becuase they take responsibility for making sure that the option provided is suitable) and there are tax, portability and other issues for employees.
An annuity option outside of a 401k plan but through an employer is simply an option that is there for employees once they leave the company (retire, change employers, etc).
Rose replied on Permalink
Safest Annuity
Here is some information on in-plan annuities and the fiduciary responsibility employers have to select the "safest available" annuity:
http://www.workforce.com/section/02/feature/25/21/95/
Anonymous replied on Permalink
Should I ask my employer
Should I ask my employer about providing annuities? are there benefits to doing this through an employer or should i just go about it on my own?
tom replied on Permalink
Should I ask my employer
There certainly does not seem to be any downside to simply asking your employer about it.
That said, in-plan annuities are still not very common. This will likely change over the next several years.
Probably more likely at this point that an in-plan annuity option would be provided by a larger employer (500 or 1000+ employees). This is the part of the market where some early adoption has taken place.
In any event, get some info from your employer if it is there. Shop around for info and for financial advisors who deal with annuities. There is absolutely no need to rush into anything.