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Should you lock your money in a 401(k) annuity?

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in Small Business Tax,Small Business Tax Deduction Strategies

As you continue to salt away money in your 401(k), you might wonder how you’ll create a steady income in retirement. Should you consider the financial services industry’s new pitch: the 401(k) annuity?

Strategy: Don’t dive into the pool’s shallow end. If you can offer this 401(k) feature, weigh your options carefully before committing.

The premise is simple: An annuity resembles the big company pension plans from days of yore. It takes the worry out of managing 401(k) funds after you retire. And, by going through your 401(k), it eliminates comparison-shopping the dizzying array of annuities in the retail market.

In effect, you’re acquiring a “do-it-yourself pension” with little muss or fuss.

But this new financial product has potential drawbacks. Although the fees are usually lower than retail annuity fees, the annual expenses can be double those for other 401(k) investments. Plus, it could be awkward to handle ...(register to read more)

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