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Should the U.S. government create an "automatic annuity" system in which, some portion of IRA or...

Should the U.S. government create an "automatic annuity" system in which, some portion of IRA or 401(K) balances are converted to a fixed annuity at retirement? Explain your opinion

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Expert Solution

Before Giving Suggestion on whether some portion required to be coverted into Fixed Annuity plan we must know the IRA(Individual Retirement Plan) and 401k Plan.

INDIVIDUAL RETIREMENT AGGREEMENT :

An IRA is an account set up at a financial Institution that allows an Individual to save for retirement with tax-free growth or on a tax-deferred basis.
There are four main types of IRAs: traditional, Roth, SEP and SIMPLE.

401k Plan :

A 401(k) plan is a tax-advantaged, defined-contribution retirement account, which are offered by many employers to their employees in which employees contribute a predetermined amount and the employer can match same or all of the contribution in Account

Why should the Goverment Convert Launch Automatic Annuity Plan, Where Some portion of IRA or 401k Balance are converted into Fixed Annuity at Retirement?

1) In IRA it is uncertain that how well your investment will do so it is better keep the certain portion of investment as Fixed Annuity.

2) Putting all Investment in IRA And 401K may bring you as risk that you could get out of Money At Retirement Period  and Automatic Annuity will Provide you Regular Income at Fixed Interval in Retirement Period

3) Automatic Annuity Plan Provide the Annuitant a Benefit to Provide Income untill their Death as the Benefit of
Fixed Annuity

4) Holding a Portion of 401K With Fixed Annuity Also Provide Holder the Benefit to Borrow Fund From 401K Plan

5) Holding Investment in IRA with Certain Portion of Fixed Annuity will also provide holder the benefit of
IRA that after Certain Period you get the money you Deposited with IRA with Investment Benefit and on other hand Fixed Annuity Provide you Certain Income Irresective of Market Risk

ekkarill92 answered 2 years ago
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