Plan Sponsor Considerations For In-Plan Annuity Offerings

Plan Sponsor Considerations for In-Plan Annuity Offerings

Last year's newsletter included an article generally describing the initial compliance considerations when annuity options are added to a defined contribution plan. As predicted, we have seen a sharp increase in insurers actively reaching out to plan sponsors and retirement committees to present information on their annuity products. This article expands on last year's article to explain the safe harbor requirements for annuity offerings, which vary depending on the type of annuity selected and the manner in which it is offered.

Annuities in a Nutshell

Annuities vary in structure—fixed versus variable, immediate versus deferred, single life versus joint-and-survivor—but all annuities essentially provide guaranteed payments later in exchange for money today. Annuities offer tax benefits, certain value payments, and guaranteed rates of return but are also complex, relatively illiquid, and