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Insurance Companies in the 401(k) Market a Good Idea? #401(k) #Insurance

By June 21, 2019No Comments

Anybody see the recent draft bill that was passed by the House with new 401(k) rules?

The bill would allow 401(k) providers to more easily use insurance companies and provide annuities. They would also require 401(k) providers to tell clients on each statement how much their balance would be worth in the form of an annuity in retirement.

I’m not so sure letting the insurance industry into the 401(k) plan space is a good idea. Insurance companies are in the 403(b) space and 403(b)s are generally not as good as the 401(k)s that we see. They’re usually more expensive and their investment options aren’t great.

I’m not saying annuities can’t be good. Annuities can be good things, but they’re often expensive and confusing, and people don’t understand them. A lot of times, people who sell them don’t understand them. The way that they’re generally currently sold is not a good thing.

I guess we’ll see how this plays out. I can’t help but think that the lobbying muscle of the insurance companies is being used to get in there and tap into the giant 401(k) market. I’m sure they are going to love it. I don’t see having them in 401(k) plans as a good idea.

My name is Mike Garry, and my company is Yardley Wealth Management. We are a fiduciary, fee-only financial planning, and wealth management firm in Newtown, Pennsylvania. (That’s in Bucks County). Our law firm is Yardley Estate Planning, LLC and is in the same place. We only do Estate Planning work and I am licensed in Pennsylvania and New Jersey.

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Michael Garry

Author Michael Garry

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