Plans won’t be held liable if insurance company fails

Employers have avoided offering annuities due to concerns of getting sued if insurance providers would go out of business- an understandable concern, but not one they should worry about any longer due to another provision of the SECURE Act. Now they’ll be protected from liability provided they pick a provider that meets certain requirements. These include maintaining adequate reserves, filing financial statements and being licensed by the state.

Another benefit is the fact that one can avoid surrender charges and even fees in the case of transferring annuities to an IRA or future employer’s plan.
But are annuity fees higher than low- cost index funds that mimic benchmarks such as the Standard & Poor’s 500 stock index? Well, this is not a fair comparison to make. Annuities are a form of insurance, after all. If you outlive your life expectancy it’s not your problem, its the insurance company’s problem. That just means you get a guarantee for payment for the rest of your life no matter how long it turns out to be.

After all is said and done we can see why some people are especially happy with the SECURE Act.