Does Your 401(k) Have an Annuity?

Annuities, once confusing to many, even suspect to some, are showing new life.
As more people worry about the finances of retirement, the concept of a guaranteed income stream for life, once available to many U.S. workers through employer pension payments, looks like a vital component of their portfolios.

 A May 2012 survey of 500 large U.S. employers found that 16 percent already offer their employees a 401(k) option for a retirement income stream, rather than just a lump sum. Another 22 percent plan to offer their workers such an option this year, the survey found.

In addition, more than 90 percent of workers in their 20s, 30s and 40s want access to guaranteed income through their 401(k)s, according to a 2012 study by The Hartford.

The interest in annuities comes decades after employers began phasing out defined benefit plans that guaranteed lifetime income for workers, replacing them with defined contribution plans, which allow workers to set aside pre-tax income in a savings plan, typically in the form of a 401(k). Many companies also contribute funds to those plans.

The federal government is trying to help make that happen. In 2012, the IRS made it easier for savers to convert a portion of their 401(k) savings to an annuity product.
The goal is to encourage people to buy an annuity sooner than later. 

Retirees worried about making their money last could always take their 401(k) lump sum distribution and purchase an annuity, but few do it.

New products can offer death benefits, withdrawals, participation in equity returns and other features. A "deferred" or "longevity" annuity doesn't begin making payments until age 85, or whenever the buyer thinks he'll run out of other savings.

For those interested in researching financial products that offer a lifetime income stream, there's no shortage of advice. Ratings agencies grade and rank companies offering the products.

Go with people who have very solid credit ratings,this is not the time to shop on the Internet for the cheapest rate.

http://www.mintcofinancial.com/products/annuities/ 

Call Mintco Financial Team to review your 401K Plan: 813-964-7100 or 716-565-1300