If annuities come to your 401(k) savings plan, here’s what to know

If retirement legislation currently under consideration in Congress ends up becoming law, new options for your nest egg may show up in your 401(k) plan.

The Secure Act, which passed the House in May and awaits Senate action, includes a provision that would make it easier for companies to include annuities in their retirement plans. And while people may be drawn to these guaranteed-income options, it’s important to grasp both the pros and cons before putting any money into one.

“As with any investment, It’s important to understand how it works, what it costs and how it fits into your overall financial plan,” said Frank O’Connor, vice president of research for the Insured Retirement Institute.

In simple terms, annuities can provide a way for retirees to ensure they receive lifetime income from their savings.

While companies already can offer annuities in their 401(k) lineups, just 9% do, according to the Plan Sponsor Council of America. The Secure Act aims…