Proposed Bill Could Allow Older Workers to Use 401(k) Funds for Annuities
A bipartisan bill reintroduced in the House aims to give workers aged 50 and older the option to roll over portions of their 401(k) savings into annuities. The Retirement Simplification and Clarity Act seeks to simplify retirement planning while introducing new flexibility for older investors.
Financial advisors caution that annuities often come with complexity, high costs, and liquidity constraints. The legislation also targets clearer disclosure requirements for 401(k) rollover options—a pain point for many departing employees who struggle to understand distribution choices.
Representative James Panetta (D-CA) frames the proposal as streamlining retirement planning. Current rules already permit in-service rollovers to other tax-advantaged accounts, but the bill WOULD specifically authorize annuity purchases within 401(k) plans.
