Confusing Options May Be Coming to Your 401(k). It Could Cost You.
Americans may soon see some welcome changes to the rules governing their retirement savings plans, including the ability to contribute to their Individual Retirement Accounts longer or tap them to help pay for the arrival of a new child.
But the same bipartisan bill could also make retirement planning even more confusing, particularly for workers hoping to recreate the pensions of a bygone era.
Among the two dozen or so rule changes is a provision that is strongly supported by insurance companies but has consumer advocates worried. It would eliminate some of the liability for employers who add annuities to the menu of options for their 401(k) plans — including expensive and complex products that purport to offer the peace of mind of a guaranteed income stream.
“There will come a time where we will point back to this as the start of a trend toward high-cost annuities being offered in 401(k) plans to the detriment of retirement savers,” said Barbara Roper, director of investor protection at the Consumer Federation of America.
ADVERTISEMENT
The proposed changes are part of H.R. 1994, the Setting Every Community Up for Retirement Enhancement Act of 2019, which passed the House with an overwhelming bipartisan majority on May 23. The bill would also allow small businesses to band together to create retirement plans and broaden the uses of college savings accounts. Leaders in the Senate are now pushing to take up similar legislation, which also has wide support and was first introduced in 2016.
No comments:
Post a Comment