The Act isn't perfect. Kim O'Brien, vice chairman and CEO of Phoenix-based Americans for Annuity Protection, which supports the measure overall, disagrees with its removal of "stretch IRA" protections. A stretch IRA is an estate planning tool that extends—or "stretches"—the tax-deferred status of an inherited IRA when it passes to a non-spouse beneficiary.
"A stretch IRA allows grandparents to provide college funds for the next generation and other things the middle class really needs," says O'Brien. "But under the Act, many non-spouse heirs will have to empty inherited retirement accounts within 10 years."
Furthermore, the Act won't affect everybody equally. "Only certain large companies will start to think about adding [annuities]," acknowledges Will Hansen, chief government affairs officer for the Washington, D.C.-based American Retirement Association. "I don't see it going down to the small- or mid-size market."
Yet that doesn't deter supporters. Todd Solash, CEO of individual retirement at American International Group, cites a "clear need for more access to guaranteed lifetime income."