Retirement income review: Hueler

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(MoneyWatch) This post starts my series on various retirement income offerings that are being introduced in 401(k) and other defined contribution retirement plans. Today we'll take a look at Income Solutions, the online annuity bidding platform offered by Hueler Investment Services that's available on the platforms of many 401(k) plan administrators. It's also available to customers of Vanguard through its Annuity Access program.

Do you long for the good old days of company pensions, where you're paid a monthly retirement income for the rest of your life, no matter how long you live and no matter what happens in the economy? You can get that with a simple "immediate annuity," a product that's been available for years from insurance companies. But don't confuse these time-tested products with "deferred variable" annuities, which can have high expenses and poor investment returns -- they've given annuities a bad reputation.

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If you don't want to pay a lot of commissions to an insurance agent, consider buying an immediate annuity with the help of Income Solutions, which competitively bids fixed and inflation-adjusted immediate annuities among a panel of highly rated insurance companies.

It's pretty easy to use. Go to Income Solutions' website and answer a few simple questions, including your date of birth, sex, state of residence, and whether you want to cover your spouse or beneficiary to have a joint and survivor annuity (and his or her date of birth and sex). You'll also need to tell the system how much money you have to purchase an annuity.

You can also tell the system whether you want an annuity that's fixed in dollar amount, increases at a specified annual rate, or is adjusted according to the Consumer Price Index. The inflation protection will cost you more, meaning that a given amount of retirement savings will produce a lower initial monthly payment with an inflation-adjusted annuity.

The system then gets bids from Hueler's panel of top-rated insurance companies, and it shows how much of a monthly paycheck each insurance company would provide. For each insurance company, the system also shows you their credit ratings from A. M. Best, Moody's (MCO), and Standard & Poor's.

Non-commissioned telephone representatives can answer any questions you may have about the transaction, help you understand the terms, and guide you through the tools on the website. However, they won't give you financial planning advice, such as whether an annuity best meets your goals and circumstances, or how much of your retirement savings to devote to an annuity. The phone representatives will also be glad to work with your financial planner, if you're using one.

If you elect to apply part or all of your 401(k) account to an annuity, you'll want to make sure you buy a tax-qualified annuity, so you don't have to pay income taxes on the part of your savings that's applied to the annuity. Instead, you'll pay taxes on the income that you receive each year. The representatives at Income Solutions can help you execute the transaction in compliance with the IRS rules in order to maintain this favorable tax treatment.

"Our program gives consumers a fair shake when buying an immediate annuity," Kelli Hueler, founder of the Income Solutions platform, told me in an interview. "We obtain institutional pricing for individuals, compare the bids from the different insurance companies, and then transparently disclose all transaction costs. This helps put your mind at ease about buying an annuity."

It's a good use of your time to understand how you'll generate your retirement paycheck. Stay tuned for reviews of other retirement income solutions that may be coming your way as part of your 401(k).

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    Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.

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