Recent regulatory changes have made it easier for 401(k) plans to offer Guaranteed Income Solutions, providing more retirement security for participants. The SECURE Act (2019) laid the foundation by introducing lifetime income disclosures, a fiduciary safe harbor for annuity selection, and the ability to transfer annuities between plans. SECURE 2.0 (2022) built on this by raising the contribution limits for Qualified Longevity Annuity Contracts (QLACs) and enhancing fiduciary protections. In 2021, the Department of Labor further reinforced these provisions, encouraging more widespread adoption of annuities in retirement plans.

Thanks to these regulatory updates, 401(k) plans are seeing significant growth in guaranteed income options that aim to help participants secure reliable retirement income. Key trends include:

  • In-Plan Annuities: Participants can convert part of their savings into guaranteed lifetime income.
  • Target Date Funds with Income Guarantees: These funds now allocate some assets toward annuities as retirement nears.
  • Qualified Longevity Annuity Contracts (QLACs): Payments begin later in life, hedging against longevity risk.
  • Fixed Indexed Annuities: Offer market-linked returns with downside protection and guaranteed income.
  • Pooled Employer Plans (PEPs) with Income Solutions: Smaller businesses can now access guaranteed income options traditionally available to larger employers.

6 Reasons to Consider Retirement Income:

  1. Consistent Monthly Income: Guaranteed income provides peace of mind by offering stability, especially for the 60% of savers worried about outliving their savings.¹
  2. Confident Spending: Retirees often retain 80% of their savings after two decades.² Guaranteed income lets you spend more confidently.
  3. More Flexibility to Diversify: With guaranteed income, you can explore higher-growth investments while reducing downside risk by 33%.³
  4. Improved Mental Well-being: 93% of savers believe guaranteed income would ease financial anxiety and improve mental health.⁵
  5. Relieving Future Burden: As cognitive decline affects decision-making, guaranteed income ensures financial security without added stress.
  6. Protection Against Exploitation: Automatic income streams can safeguard against fraud, protecting retirees from losing $28.3 billion annually.⁶

If you’re interested in discussing how these guaranteed income solutions can benefit your 401(k) plan and participants, contact Arcwood Financial today to explore your options. We’re here to help you secure a confident financial future for you and your employees.

¹ Workplace Savers Study
² Wealth Level Report
³ Case Study on Income and Investment Strategies
⁴ Financial and Mental Health Study
⁵ Guaranteed Income and Mental Health Study
⁶ AARP Financial Exploitation Report