King & Spaulding reports on ways to mitigate the risk of outliving 401(k) assets during retirement.  It’s article begins:

401(k) participants face the risk of outliving retirement assets. However, earlier this month, the Internal Revenue Service and the Treasury Department issued final regulations that make it easier for 401(k) plans, individual retirement accounts and other retirement programs to invest in certain annuity contracts that could help mitigate this risk.

How will these regulations affect your 401(k) or IRA?

One strategy to mitigate the risk of outliving 401(k) account or individual retirement account (“IRA“) assets is to invest in annuity contracts that delay the commencement of benefits until after age 70 1/2. Annuities with a deferred commencement date (for example, benefits commencing at age 80 or 85) generally are less expensive than annuities commencing at an earlier age. However, prior to these final regulations, Internal Revenue Code rules required that the value of such annuity contracts be taken into account when determining minimum distributions that generally must begin after age 70 1/2. The final regulations make it easier to invest in deferred annuity contracts because certain of those contracts can be ignored when calculating the minimum amount that must be distributed from certain defined contribution retirement programs and traditional IRAs.

To read more, see Mitigating Longevity Risk in DC Plans | King & Spalding – JDSupra.

Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.