Interest in in-plan annuities in retirement plans has been rising, particularly with the passage of SECURE 2.0 and the persistent rising interest rates.  Now, there is a new tool that emerges as part of the traditional target date funds, which more than half of all 401(k) participants use to build their retirement savings, with the annuity: Hybrid annuity TDFs combine the asset accumulation of a target date fund with an annuity that provides guaranteed lifetime income, according to Vanguard research.

While Vanguard does not offer these hybrid annuity TDFs at the present time, the registered investment advisor (RIA) used its Vanguard Life-Cycle Investing Model (VCLM) to understand the added benefits participants could gain from blending annuities into target date funds, according to its From theory to practice: Guaranteed income and hybrid annuity target-date funds report.

Nuveen and its parent company TIAA, as well as BlackRock and State Street Global Advisors, are some of the asset companies that offer these hybrid TDFs.