Peter Gulia Posted November 25, 2014 Share Posted November 25, 2014 Recently, the Employee Benefits Security Administration and the Internal Revenue Service released guidance that makes it feasible to use an annuity as an aspect of a target-year investment fund. Has any investment manager announced a product? Peter Gulia PC Fiduciary Guidance Counsel Philadelphia, Pennsylvania 215-732-1552 Peter@FiduciaryGuidanceCounsel.com Link to comment Share on other sites More sharing options...
GMK Posted November 26, 2014 Share Posted November 26, 2014 I haven't heard of any. I think the concern for plans, and probably for target date fund providers, is the question of what happens if the insurance company folds before the participants who have dumped their money into the annuity investment retire. Who's left holding the fiduciary bag and gets sued big-time? Link to comment Share on other sites More sharing options...
mbozek Posted November 26, 2014 Share Posted November 26, 2014 More practical question is why would a plan fiduciary add an annuity product to a 401k plan for active participants because the cost of the annuity benefits can add 1 % or more to fees which simply reduce the account balance that compounds tax free. Don't need a tax deferred wrapper in a tax deferred plan. Its better for participants to invest in low cost funds with long term investment goals and purchase an annuity if it is needed at retirement instead of having a small amount invested in an annuity contract that will pay a minimal monthly benefit. John Feldt ERPA CPC QPA and david rigby 2 mjb Link to comment Share on other sites More sharing options...
GMK Posted November 26, 2014 Share Posted November 26, 2014 I totally agree, but for whatever it's worth, annuities for 401(k)'s now appear to be a reality: http://www.investmentnews.com/article/20141125/FREE/141129956/broker-dealers-sound-off-as-aig-leads-off-with-first-annuity-for-401 Link to comment Share on other sites More sharing options...
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