For those of you that have read the excellent and eye-opening book called, “Savior Retirement”, then you already have a pretty good idea about the shortcomings of 401(k) plans. Most notably that your 401(k) account will never be able to contractually guarantee a lifetime income stream. What retirement product can produce contractually guaranteed lifetime income you ask? Annuities! The next question that usually follows is, “Can you move your 401(k) into an annuity? The great news is that in many cases you can. However, some employee sponsored 401(k) plans have some rules in place to make it tough for you to move your 401(k) money. But the latest news on the subject is that many large 401(k) plan administrators are allowing certain annuities to be added as allocation options for the respective employees in the plan.
The most recent annuity product built for 401(k) plans is a fixed indexed annuity underwritten and provided by National Life Group and Life of the Southwest (LSW). The product from LSW is called SecurePlus VIP, and it allows 401(k) plan participants to access this contractually guaranteed income option. Although we haven’t seen all of the details on the actual LSW product, this is quite exciting news for any 401(k) participants that have access to this. At worst case, we hope this is a trend that continues.