In-Plan Annuities Show Promise Despite Obstacles
An "in-plan annuity" refers to an annuity option that exists within a 401k plan.
The notion of an annuity-based retirement income option within a 401k plan is a relatively new concept.
Advocates of in-plan annuities--which include key members of the Treasury Department and Congress--believe that partial annuitization is important for the retirement security of the millions of Americans whose access to stable sources of pension income is largely limited to Social Security.
There are, however, many obstacles that are preventing widespread adoption among employers. Challenges include:
- Credit risk
- Legislative and regulatory ambiguity
- Fiduciary risk for the plan sponsor
- Portability issues
- Lack of awareness and behavioral obstacles among employees or 401k plan participants
Source: Workforce Management
