(Dow Jones) Annuities in your 401(k): It's beginning to seem less a question of whether and more a question of when and how.

This week, a bevy of retirement-income experts said annuities should be offered as a 401(k) investment option as well as a default distribution option for when workers leave a company. The experts were speaking at a two-day hearing on lifetime-income options for retirement plans hosted by the U.S. Labor Department's Employee Benefits Security Administration and the Treasury Department.

From this vantage point, it seems like a done deal, and the only questions remaining are those dealing with safe harbor rules, fiduciary requirements and the in-the-way details.

For instance, insurers and others want the government to include lifetime-income options as safe-harbor investments. In effect, plan providers and others want to make sure that advisers and plan sponsors don't get sued over any recommended lifetime-income products.

Those and other issues must be addressed before the Labor and Treasury departments let annuities become a staple of the $4 trillion 401(k) market.

In his testimony, Christopher Jones, Financial Engines' executive vice president of investment management and chief investment officer, said his company believes that any proposed default retirement-income solution must avoid placing participants into a situation where they could permanently lose access to their money without having made an explicit choice.

In other words, plan participants should be asked if they want to invest their 401(k) money into an annuity when they leave their employer. That transfer shouldn't happen automatically, especially as it's an essentially irreversible decision, or, if not irreversible, certainly a costly decision to reverse given the penalties.

There "needs to be flexibility and choice on behalf of 401(k) participants and plan sponsors," Jones said.

Most states have guaranty funds to help pay the claims of insurers and annuities that go belly up. The amount varies from state to state, but typically it's between $100,000 and $300,000. That's certainly a problem for those who might invest more with one single issuer than what the guaranty fund protects.

The other is a regulatory hurdle that must be overcome. Living-benefit riders, a typical annuity rider, aren't always covered by guaranty funds, according to Charles P. Nelson, president of Great-West Retirement Services.

In the end, one of the biggest hurdles is whether workers want annuities in their retirement plans. Based on the almost 800 letters the Labor Department received in response to its request for comments to its proposal, average Americans in general don't want a lifetime-income annuity.

"Participants already receive meaningful protection against market and longevity risk from Social Security benefits and any traditional pension income," Stephen P. Utkus, principal of Vanguard Center for Retirement Research, said in his testimony. "They have other 'annuitized' wealth in the form of Medicare benefits and, for many, a primary residence. These factors reduce the need for additional annuity income and enhance the desire for holding a portfolio of savings."

In other words, Utkus is saying most plan participants don't need an income annuity as a 401(k) distribution option.

Instead, all they need to do is withdraw 4% per year from their retirement accounts.

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