Tax Facts

Annuities in Retirement Plans

Many now believe that defined contribution plans should now be more widely used to offer participants a guaranteed defined-benefit style option. The original SECURE Act sought to encourage plans to offer an annuity option by creating a fiduciary safe harbor for the plan sponsor when selecting the annuity provider. Plan sponsors can now satisfy their fiduciary obligations in choosing the annuity provider by conducting an objective, thorough and analytical search at the outset to evaluate annuity providers. The SECURE Act also makes the annuity portable once the plan participant has chosen the lifetime income option. Some now suggest that it would be even more beneficial to automatically enroll participants in the annuity option.

We asked two professors and authors of ALM’s Tax Facts with opposing political viewpoints to share their opinions about whether employers should auto-enroll employees in annuities within their retirement plans.

Below is a summary of the debate that ensued between the two professors.

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