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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