401(k) lifetime income solutions: Is now the time for employers to offer new in-plan ‘annuity’ options?

With all the DOGE changes to Social Security involving service and job cuts since President Trump took office, there’s plenty of uncertainty to go around when it comes to employees’ retirement security. That’s why employers might want to consider offering added benefits to allay those fears that their employees have, particularly those close to retirement, and offer them some extra financial security with lifetime income solutions within the 401(k) retirement plan.

There’s been plenty of discussion over the last year about these in-plan guaranteed lifetime income solutions, but it seems that many employers and plan sponsors are hesitant to include these new offerings. Two big in-plan income options that have launched in 2024 include:

• T. Rowe Price’s Managed Lifetime Income blends a managed payout for the first 15 years with a Qualifying Longevity Annuity Contract (QLAC) from Pacific Life for the remaining balance. T. Rowe Price accepts the fiduciary responsibility for the selection and monitoring of the QLAC provider.
• BlackRock’s LifePath Paycheck, which gives employees access to guaranteed income through a target date fund, allowing DC plans to switch some of an enrollee’s investments into an annuity at age 55. The allocation can then grow to 30% of the portfolio by age 65.

Even though these giant financial firms are behind these new lifetime income solutions, adoption by employers and plan sponsors to add these new “annuity” funds into their plans has been sluggish.