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401k Annuity Options are Increasing


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According to “More 401(k) Sponsors Consider Annuities: Survey” from the National Underwriter Online News Service, the 401k annuity is becoming increasingly popular.  A recent survey from Watson Wyatt Worldwide Inc. shows that more and more employers are offering annuity products to employees participating in 401k programs.  Companies are looking to provide their employees with a steady stream of income after retirement and they are realizing that annuities are a great way to offer just that.

The U.S. Department of Labor is working to get employers to offer lifetime annuities or other comparable products in their defined contribution plans.  The WWW survey showed that 22% of employers with 401k plans offer annuity choices.  At least 10% more are considering adding the option for their employees.  The recent economic crisis forced many employees to hold off retiring because their 401k retirement accounts lost so much value.  Annuities are an investment vehicle that eliminates that risk of losing money in a bad economy so they are a great product from the employee’s standpoint.  The reason that employers were less apt to offer annuities in the past was a lack of employee demand and the administrative complexities.  Now that the 401k risks have been exposed, both employers and employees are looking for less-risky ways to use their 401k money for retirement.

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