Regulators Give Annuities a Green Light for Retirement
The Treasury issued guidance supporting the use of deferred annuities in target-date funds.
Why does this matter to investors?
As the retirement landscape has shifted investors from the predictable payments of defined-benefit plans to the relative uncertainty of saving for their own retirements via defined-contribution plans, plan sponsors and industry practitioners have sought to combine aspects of both worlds: provide investors with guaranteed income and still give them flexibility with their assets. The U.S. Department of Treasury and the Internal Revenue Service issued guidance on Oct. 24, 2014, that paves the way for strategies designed to help 401(k) participants accumulate a guaranteed income stream within a defined-contribution plan.