Uncle Sam wants you to consider this for retirement

Need a hands-off retirement plan? Try target-date funds
Need a hands-off retirement plan? Try target-date funds   

Worried about outliving your retirement nest egg?

The IRS and the Treasury Department are promoting the use of deferred income annuities in 401(k) accounts.

Rather than devoting all their account to annuities, employees can choose to channel a part of their savings to purchase a "guaranteed income for life while retaining other savings in other investments," the Treasury Department said in a release on Friday encouraging people to consider this option.

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Taking a loan from yourself
Taking a loan from yourself   

Employers can incorporate deferred income annuities in default target-date fund investment options, the agencies said.

In target-date funds, as workers near their expected retirement year, investment allocations slowly shift from equities to fixed income. Target-date funds may include annuities that allow payments to begin as soon as a person retires or later, the agencies said.

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"As boomers approach retirement and life expectancies increase, income annuities can be an important planning tool for a secure retirement," said J. Mark Iwry, senior advisor to the secretary of the Treasury and deputy assistant secretary for retirement and health policy.

If an employee has more knowledge about annuities, it is more likely that the person will have a positive attitude toward them and will eventually own one, according to a study from LIMRA Secure Retirement Institute.

The Treasury and the IRS finalized rules in July regarding longevity annuities used in IRAs and 401(k) accounts. Longevity annuities are a form of deferred income annuity that divvies up a lump sum into a steady stream of income but requires the retiree to choose an income start date that's up to 40 years in the future.