In an article published on August 20, 2018 by Financial Advisor, shareholder Joshua Sutin shares concerns towards using annuities in 401(k)s. Americans are living longer, and retirement lasts longer than ever before. While annuities may provide financial security during retirement, they can be complicated and don’t operate efficiently in 401(k) plans. Sutin explains, “they may help individuals with a stream of income they can plan out with their investment advisor, and they can be a good creditor-protection vehicle, but it’s best not to dive in without a trusted professional investment advisor to help decide.”
Sutin also adds that there are legal reasons why annuities do not fit into 401(k) plans, such as the “safe harbor” requirements. “It is hard to find a good annuity product with reasonable fees that also fits the investment policy statement guiding the fiduciaries,” he adds.