Cost for Plan to Obtain Annuity?

[chris]

Profit Sharing Plan wants to consider offering J&S annuities as distribution option. Practically speaking it would seem Plan would need to deal with current investment provider to see if it could assist with obtaining such annuity contracts in the event a participant were to elect the same or locate one that can do so. Can Plan charge an electing participant some level of administrative expense associated with obtaining the annuity contract if Plan has to do its own legwork to obtain such annuity contract? If so, what might be a reasonable range for such administrative expense? You can probably tell I don't deal at all with J&S annuities based on my questions, but I am grateful for any help you might provide....

[Bird]

A. Sponsor is probably using some flawed logic if it wants to add annuity provisions to a plan that doesn't have them. Any participant can buy an Individual Retirement Annuity and thereby create his or her own annuity option (I'm not saying that's a good idea either). Just because the government wants more annuities doesn't mean it is a good idea. I'd say it's a singularly bad idea in today's interest rate environment, where you'd effectively be locking in historically low rates for the rest of your life.

B. I don't know if a plan may add costs for providing an annuity, but I don't think it's appropriate. 99% of the time there's an agent involved who's going to get a nice commission; let him or her do the legwork.