Reducing regulatory obstacles to annuities in 401(k) plans



Retirees with defined contribution plans face a key dilemma: how and when to convert their retirement savings into income in a way that minimizes the risk of outliving their assets without unnecessarily sacrificing their standard of living. Annuities offer one way to resolve this dilemma. We explore legislative and regulatory reforms that could encourage workers to annuitize more of their 401(k) and other defined contribution balances upon retirement. We propose changes that would create an appropriately protective fiduciary safe harbor for plan sponsors selecting annuity providers, increase the portability of annuities, and reform the required minimum distribution rules relating to retirement income.