The Shift Toward Lifetime Income in 401(k) Plans 

For decades, 401(k) plans were all about accumulation. Participants built savings but were left on their own to figure out how to turn that balance into income. That’s beginning to change. Thanks to provisions in the SECURE Act of 2019 and SECURE 2.0, plan sponsors can now more easily include lifetime income options—typically through annuities—inside 401(k) plans. 

The motivation is clear: as pensions disappear, many employees want the confidence of a paycheck that lasts for life. For advisors, this opens new territory—one that blends the familiarity of defined contribution plans with the guarantees of insurance products. 

What’s Actually Changing 

Before SECURE reforms, fiduciary risk and portability were major barriers to offering annuities in 401(k)s. Plan sponsors worried about what would happen if an insurer failed or if participants changed jobs. 

Now, those obstacles are easing. Section 204 of the SECURE Act of 2019, implemented through Department of Labor guidance, created a fiduciary safe harbor for selecting insurers. This provision allows plan fiduciaries to rely on objective criteria—such as the insurer’s financial strength and ability to meet obligations—when choosing a provider, reducing liability concerns. Participants can also port an in-plan annuity to an IRA or another plan if they leave their employer. 

The result: recordkeepers and asset managers are steadily introducing “in-plan guaranteed income” features, sometimes within target-date funds or as optional elections that convert a portion of assets into a lifetime stream. 

What Advisors Need to Watch 

For advisors managing rollovers or holistic retirement plans, this evolution has several implications: 

• Fewer rollovers: Participants may choose to keep assets in the plan if it offers lifetime income, limiting IRA rollover opportunities. 

• New integration points: Advisors may need to coordinate with plan recordkeepers or employer benefits teams to understand how in-plan annuities fit with other income sources. 

• Education gaps: Clients often misunderstand how annuities inside 401(k)s differ from retail products—especially around liquidity, guarantees, and pricing. 

• Compliance and disclosure: Fiduciary standards are shifting as regulators pay closer attention to how guaranteed income options are presented within plans. 

In short, annuities inside 401(k)s don’t eliminate the advisor’s role—they redefine it. Advisors become educators and integrators, helping clients evaluate whether their plan’s income feature aligns with their broader retirement strategy. 

A New Frontier for Retirement Advice 

In-plan annuities are still in early stages, but momentum is building. As of 2025, major platforms, including Fidelity (Income Direct), BlackRock (LifePath Paycheck), and Vanguard (in partnership with Nationwide) continue to pilot or gradually roll out lifetime income options. They’re joined by T. Rowe Price, Empower, Vestwell, and other recordkeeping and asset-management firms developing similar capabilities. 

Most programs remain limited to selected plan sponsors rather than universal adoption—but the direction is clear. Defined contribution plans are moving toward lifetime income, and advisors who understand these products will be better equipped to guide clients through that transition. 

For advisors, this is an opportunity to expand value—not just by helping clients pick investments, but by guiding them through the income phase of retirement planning. As guaranteed income becomes a standard feature of 401(k)s, understanding these products will be as essential as understanding mutual funds once was. 

---

Takeaways 

• Defined contribution plans are evolving. 401(k)s are beginning to include guaranteed income options to replace the security once provided by pensions. 

• Advisors need to bridge knowledge gaps. Clients may not understand how in-plan annuities work or whether to use them versus rolling over to an IRA. 

• The role of advice is shifting. Advisors who can explain and integrate lifetime income features into broader plans will be best positioned as this trend grows.