Sign in
Become a MarketWatch member today
Robert Powell
Feb. 11, 2010, 12:01 a.m. EST · Recommend (1) · Post:
View all Robert Powell "º
"¹ Previous Column
Obama's budget crimps estate-plan strategies
First Take "º
Wal-Mart, P&G bring you wholesome TV
By Robert Powell, MarketWatch
BOSTON (MarketWatch) -- Uncle Sam wants you. Or at least he wants your opinion about your retirement plan. Yes, the Labor and the Treasury Departments want to know whether you think requiring employers to offer lifetime annuities as a rollover option to retiring workers is a good idea.
The new credit-card rules that go into effect on Feb. 22 are supposed to protect you, but will they? Here are four ways to watch what's in your wallet. Andrea Coombes reports.
We "are soliciting public comments [to determine] what steps to take to enhance retirement security for workers in employer-sponsored retirement plans through lifetime annuities or other arrangements that provide a stream of income after retiring," said the Labor and Treasury Departments in a recent release.
Typically, you get to do one of three things with your 401(k) when you leave your employer. You can roll your money into an IRA, leave it behind at your employer, or transfer your money to your new employer's plan.
Most folks roll their 401(k) into an IRA and invest the money in stocks, bonds, and mutual funds, none of which address the issue of longevity risk and none of which provide a guaranteed stream of income for life.
What's on the table right now is the notion that workers who leave their job be given the option to invest some or all of their 401(k) money into an annuity that would provide income for life -- just like a traditional defined benefit and Social Security.
Lawmakers, policymakers, academics and industry executives say adding annuities as an investment option or as a rollover option is one way of helping retirees make sure they don't outlive their nest egg. It's an option that's often offered to workers in other countries.
So what do Labor and Treasury want? According the request for information (RFI), Uncle Sam wants your comments on a broad range of topics, but especially the following:
The advantages and disadvantages of distributing benefits as a lifetime stream of income both for workers and employers, and why lump-sum distributions are chosen more often than a lifetime income option.
The type of information participants need to make informed decisions in selecting the form of retirement income.
Disclosure of participants' retirement income in the form of account balances as well as in lifetime payment streams.
Developments in the marketplace that relate to annuities and other lifetime income options.
You likely have plenty to share with Uncle Sam about the above. But just in case you need help getting your creative juices flowing, here's a snapshot of what some retirement experts are saying about the government's plans to add annuities to your retirement plan.
The government's efforts are misplaced, according to Kerry Pechter, editor of the "Retirement Income Journal" and author of "Annuities for Dummies."
Those saving and investing for retirement don't lack for product. "There are already lots of perfectly practicable income solutions available to people," Pechter said.
"That's not the problem. The problem is that most people cannot afford them. Most people don't accumulate enough through defined-contribution plans to fund annuities that will sustain them for 25 years of leisure," he said. "The 401(k) system is a very rickety foundation on which to try and build a reliable lifetime-income scheme. The middle class needs more money, not more tools."
- SMF | 12:28 a.m. Today12:28 a.m. Feb. 11, 2010
Feeling overwhelmed by the sex, violence and inappropriate content on prime-time television? Fear not, squeaky-clean entertainment is on its way to your living room.
1:06 p.m. Today1:06 p.m. Feb. 11, 2010 | Comments: 6
Tech Tales
Macworld show could sputter without Apple
Nate is nervous but not panicked "¦ yet
On Retirement
Are you for or against annuities?
The Economist's Corner
It's time for the Fed to help savers
Minyan Market Musings
Why European debt matters to the U.S.
On the Markets
Dow Theory letters challenge the bulls
Writing on the Wall
Wall Street's latest contagion goes global
Read Full Article »