Annuities In 401(k) Plans Are A Terrible Idea

Susan Conrad, you get a gold star. When asked to comment on the new proposal to include annuity options in a 401(k) plan, Ms. Conrad said, “All annuities are not created equal, and that concerns me. Our industry is moving towards more transparency, and the introduction of annuities as a plan option could take us in the opposite direction.” Anthony Webb, you get a gold star, too. He added, “They’re not offering an inflation-indexed product, but if you are buying a product for 25-years into the future, you are going to be concerned about inflation.”

The argument in favor including annuities in a 401(k) plan, summarized by the St. Louis Post-Dispatch in this article titled “Regulators Seek to Make 401(k) A Bit More Like A Pension”, is this: “Buying a deferred annuity essentially converts a lump sum into a future stream if income. The Treasury rules envision that, … Read the rest of this article!