The "Fixed Annuity 401(k)" Explained: Should Minnesotans Protect Their Retirement with Guaranteed Income?
- JHN FINANCE
- May 14
- 3 min read
Updated: May 14
What is a Fixed Annuity 401(k) Option?
A Fixed Annuity 401(k) option allows you to allocate a portion of your retirement savings into a guaranteed insurance contract to protect your principal from Wall Street volatility and secure lifetime income. Thanks to recent legislation like the "Setting Every Community Up for Retirement Enhancement Act of 2019", better known as The SECURE Act, you can utilize this either while still working (an in-plan annuity) or when you retire (a rollover to a private fixed annuity). JHN Finance helps professionals navigate this complex intersection of 401(k)s and annuities to build a foundation of guaranteed income.
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How the SECURE 2.0 Act Supercharged Retirement Annuities
The SECURE 2.0 Act, passed as part of the Consolidated Appropriations Act of 2023, completely rewrote the rules to help Americans protect their assets from being outlived. According to the Senate Finance Committee’s official summary, these legislative updates created massive wealth preservation opportunities:
Pushed-Back RMDs: The starting age for Required Minimum Distributions (RMDs) was pushed from 72 to 73, and will reach 75 by 2033. This gives your investments more time to grow tax-deferred, and the penalty for missing an RMD was slashed from a brutal 50% down to 25%.
Massive QLAC Expansion: For Qualified Longevity Annuity Contracts (QLACs), the government repealed the restrictive 25% limit on account balances and increased the maximum premium allowed to $200,000.
Annuitization Tax Fixes: The new laws fixed complex RMD calculation nightmares, allowing annuity payouts held inside a retirement account to cleanly and directly satisfy the RMD requirements for that specific portion of your portfolio.
No More Excess Contribution Penalties: If you accidentally contribute too much to your IRA, withdrawing the excess funds and their earnings before the tax-filing deadline no longer triggers a 10% early withdrawal penalty.
Roth 401(k) Expansions: Starting in 2024, Roth 401(k)s are no longer subject to RMDs during the owner's lifetime. Additionally, employers can now deposit company matches directly into an employee's Roth account, and unused 529 College Savings funds can be rolled into a Roth IRA (subject to a $35,000 lifetime limit).
"Super" Catch-Ups: Starting in 2025, workers aged 60 to 63 can make catch-up contributions of up to $11,250 to their workplace plans.
How Does an In-Plan 401(k) Annuity Work?
An in-plan 401(k) annuity allows you to purchase an annuity directly through your current employer's retirement provider. The main benefit is convenience, as it happens automatically within your existing account. However, the downside is that you are entirely restricted to whichever single insurance company your employer selected, meaning you cannot shop the open market for better rates.
Can I Roll My 401(k) Into a Private Fixed Annuity Without Penalties?
Yes, you can complete a direct rollover of your old 401(k) into a private Fixed Annuity (held inside an IRA) without triggering a taxable event or paying early withdrawal penalties. This private rollover option allows an independent Private Brokerage to shop top-rated carriers nationwide, securing higher guaranteed interest rates and better payout terms than you would typically find inside an employer's restricted plan.
How Can JHN Finance Help with 401(k) Rollovers?
You spent decades building your 401(k); do not leave it entirely exposed to market whims at the finish line. As a Private Brokerage, JHN Finance specializes in helping clients safely roll their 401(k)s into secure, tax-advantaged fixed annuities to create a private pension.
Contact our office today to review your current 401(k), verify how SECURE 2.0 impacts your specific portfolio, and explore how a fixed annuity rollover can secure your financial future.
Ready to Secure Your Vision? At JHN Finance, we provide sophisticated insurance architecture for modern families and corporate leaders across the Twin Cities.
Book Your Private Consultation > Virtual reviews and in-office appointments available at our downtown Minneapolis location with a Your JHN Finance Account (331 2nd Ave S, Minneapolis, MN 55401).
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