Fidelity Investments is launching a product that lets 401(k) or 403(b) plan participants who are retiring use a portion of their savings in the plan to buy an annuity to provide retirement income.
Guaranteed Income Direct is integrated into Fidelity’s employee benefits portal and offers workers immediate income annuities at institutional pricing from the insurance company of their choice. They can use whatever portion of savings they want on an annuity, and any savings that they don’t use to buy an annuity can remain within the plan. Fidelity’s employee benefits portal also provides education and support for employees who are considering buying an annuity.
Read more: What happens to your Fidelity 401(k) if you leave your job?
“Shifting from saving for retirement to living in retirement is one of the biggest transitions a person will make in their lifetime,” Keri Dogan, senior vice president of retirement solutions at Fidelity, said in a release. “Our new Guaranteed Income Direct product provides employees with a simplified option to use their retirement savings plan assets to create their own personal pension and provide them with a steady, reliable stream of income to help cover their expenses in retirement.”
Fidelity cited increasing interest among companies and their workers in annuities options connected to retirement plans and said the SECURE Act had reduced the fiduciary risk involved for employers in providing such options. It also noted that its workplace savings platform serves nearly 8 million people who are approaching retirement.
Fidelity already offered the Guaranteed Income Marketplace, which employers can use to help employees access annuities outside of the retirement plan.
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