The federal government wants to give retirement plan participants more incentive to invest in annuities. In a new package of proposed regulations and rulings, the IRS and Treasury Department are reducing the administrative burdens for partial annuities by simplifying the benefit calculation. (Reg.-110980-10)
A partial annuity can provide a lump-sum payout with a stream of income over a term of years.
In addition, the required minimum distribution (RMD) rules will be relaxed so retirees can use part of their IRA or 401(k) balances to buy “longevity annuities.”
These begin late in life—typically, at age 80 or 85—so premiums are cheap and the retirees don’t have to worry about outliving their savings.