But if a pre-retiree purchases an annuity through his or her employer, commissions are no longer an issue, Frese says. In a plan setting, the commission from each individual buyer is removed, and the purchasing decision is made solely on whether the product makes sense for the participant.  

"Annuities are institutionally priced when purchased through an employer, so there's no built-in commission paid to an agent or broker to sell you that product, where if you buy it on your own, you're going to have to pay some type of commission to the person who is negotiating the contract for you because that's how they get paid," Frese says. "You're just getting the information to determine whether it's the best deal for you. The people you're talking to are benefits people, not the insurance agents; they have no ax to grind."

Annuities also can be beneficial to employers because it makes work force management easier, Frese says. Many people are delaying retirement because of where their 401(k) plans are sitting, which makes it difficult for employers to make future work force management decisions.  

"From the employer's perspective, it helps you know who needs to replaced and when," Frese says. "Are younger people going to be promoted? What's the exit timing of an employee? If your income at retirement is more predictable, those kinds of issues can be planned."

Offering annuities to employees can also be risky, though, Carosa says. Employers first moved to defined contribution models in an effort to reduce corporate liabilities and give employees more self-control over their retirement funds. Annuities, however, move away from this model because the liability is on the employer.

"For participants, if they get annuities through the employer, then they may still have the ability to sue the employer if something goes wrong; whereas, if they get them by themselves, then they can only sue the insurance company," Carosa says. "The idea of putting annuities into 401(k) plans risks going backward in terms of liability for the corporate plan sponsors."

Ultimately, there are both advantages and disadvantages to offering annuities as a retirement option. There is still a certain amount of education that needs to go into learning about these plans, Frese says, but with the proper understanding, this could be a good option for some participants.

"I think this is a good option for participants and 401(k) plans," Frese says. "It's new, so there's still a lot for people to learn, but I think it will be helpful to employees."

Still, before jumping into an annuity, there should be much thought as to whether this is truly the best retirement option.

"You have to be careful," Carosa says. "If something sounds like it's a cure all, it probably isn't, and you always have to be careful to look for the unintended consequences of any action."