Now that the SECURE Act makes it easier (safe harbor etc.), to include Annuities in a 401(k), experts are predicting that there will be a tsunami of new annuity sales funded by 401(k)s. Obviously there’s a ton of 401k money out there so we’re talking about a huge potential market.
My understanding is that before the SECURE Act, a participant could already purchase an annuity with 401(k) funds by executing a tax-free rollover to create an IRA annuity.
I’m trying to understand why there should now be a rush to purchase annuities with these funds. A 401(k) is already tax-deferred, so no advantage there.
I believe the following might be catalysts:
1. Major increase in 401(k) participants favoring a guaranteed income
2. Fiduciary RIA advisers are now being offered no-commission, fee-based low-cost annuities to address any conflict of interest
3. Integrating an annuity with other 401(k) investments keeps everything under one managed umbrella
So, if I were a financial adviser, why would I now recommend such a purchase? Are there other advantages to participants, or other incentives to their advisers that would create this tsunami of new sales?