Outside the Box: This 401(k) move before you retire guarantees monthly income in old age

In an unusual bipartisan effort, Congress is close to passing the SECURE Act (Setting Every Community Up for Retirement Enhancement). In a key provision, the Act encourages employers sponsoring 401(k) plans to offer retirees the chance to convert their plan balances into annuities with monthly payments for the rest of their lives.

In specific, the Act establishes a safe harbor protecting plan sponsors from future liability if they reasonably select an insurance company to offer annuities to their retirees and that company later fails to make the scheduled monthly payments.

Congress is adopting this safe harbor because fixed annuities offer significant financial benefits to workers about to retire.

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