Retirement Retirement Planning

One Big Way Your 401(k) May Be Changing in 2026

A new option is entering retirement plans — here's why it matters.

By Catherine Collins , Edited by Andrea Basse

Updated April 10, 2026

Add Us On Google

In 2026, there are many changes on the horizon for 401(k) retirement plans. One of those changes is that many brokerage firms will begin offering annuity options within 401(k) plans. Annuities are a product that offer guaranteed income to retirees, but there are benefits and drawbacks to using them that investors need to be aware of.

Here is more information about upcoming changes to these 401(k) plans, which firms will offer them, and what employees need to consider when deciding whether or not to choose annuities as one of their retirement plan assets.

Set up direct deposit - pocket $400

Set up an eligible direct deposit with SoFi Checking and Savings and you could pocket a bonus of up to $400. Make the switch, set up direct deposit, earn the bonus. It basically takes no extra work at all other than following these steps.

Why people are switching: This account earns up to an insane 4.00% APY¹ Earn up to 4.00% Annual Percentage Yield (APY) on one SoFi Savings account with a 0.90% APY Boost (added to the 3.10% APY as of 5/28/26) for up to 6 months. Open your first SoFi Checking and Savings account and receive eligible direct deposits OR qualifying deposits of $5,000 every 31 days by 12/31/26. Rates are variable, subject to change. Terms apply at <a href="https://www.sofi.com/banking/#4">sofi.com/banking#4</a>. SoFi Bank, N.A. Member FDIC. on savings for up to six months (3.10% APY standard + 0.90% APY boost) on top of that $50 or $400 bonus.² New and existing Checking and Savings members who have not previously enrolled in Direct Deposit with SoFi are eligible to earn a cash bonus of either $50 (with at least $1,000 total Eligible Direct Deposits received within 25 calendar days of your first Eligible Direct Deposit of $1 or more) OR $400 (with at least $5,000 total Eligible Direct Deposits received within 25 calendar days of your first Eligible Direct Deposit of $1 or more). Cash bonus amount will be based on the total amount of Eligible Direct Deposit received within 25 calendar days of your first Eligible Direct Deposit of $1 or more. If you have satisfied the Eligible Direct Deposit requirements but have not received a cash bonus in your Checking account, please contact us at 855-456-7634 with the details of your Eligible Direct Deposit. Direct Deposit Promotion begins on 5/15/2026 and will be available through 12/31/26. See full bonus and annual percentage yield (APY) terms at <a href="https://www.sofi.com/banking/checking-offer/">sofi.com/banking/checking-offer/</a> That's way better than the measly 0.38% APY (as of 06/15/26)³ Based on <a href="https://www.fdic.gov/national-rates-and-rate-caps">this</a> FDIC data, as of 6/15/26. national average savings accounts offer.

No monthly fees and no surprises. Open your account and earn up to a $400 bonus

Major brokerage firms plan to add annuity options to 401(k) accounts

Recently, Vanguard announced plans to add annuities to its target date funds in its retirement plans. Vanguard is one of the largest brokerage firms offering retirement accounts, and these new products will provide a hybrid approach where workers can allocate a portion of their 401(k) contributions to an annuity. Other firms offering similar products include BlackRock, State Street Global Advisors, and others.

Shopping for cheaper auto insurance? Enter your zip code here to get started.

What is an annuity, and how does it work within 401(k) plans?

An annuity is different from purchasing a stock or mutual fund. An annuity is a financial contract between an investor and an insurance company. The insurance company takes either consistent monthly payments or a lump sum. Then it converts it into a stream of income that guarantees payouts to the investor in retirement.

There are many different types of annuities and annuity providers. Vanguard, for example, will add these annuities to specific target date funds. Target-date funds are unique in that they automatically adjust their allocation to become more conservative as the employee approaches retirement. With annuities automatically integrated into target date funds, part of those assets will be moved into an annuity, typically starting at age 55. By using this hybrid approach, employees will know that part of their retirement income is guaranteed, while the other part of their investments is in more traditional assets.

The benefits of investing in an annuity within a 401(k)

The biggest benefit that annuities offer is, of course, the predictability. Many people are feeling the effects of an uncertain market, especially with 2026 geopolitical issues and market fluctuations. This causes many people who are nearing retirement to worry that they won't have enough to live on. Annuities will provide a portion of guaranteed income to those who are worried about how long their retirement funds will last. With these options integrated into target date funds, they are also easier to use.

If you’re over 50, take advantage of massive discounts and financial resources

Over 50? Join AARP today— because if you’re not a member you could be missing out on huge perks. When you start your membership today, you can get discounts on things like travel, meal deliveries, eyeglasses, prescriptions that aren’t covered by insurance and more.

Start your membership by creating an account here and filling in all of the information (Do not skip this step!) Doing so will allow you to take up to 25% off your AARP membership, making it just $15 the first year with auto-renewal.

The drawbacks to investing in an annuity within a 401(k)

Like any investment, there are also drawbacks to choosing an annuity for your retirement accounts. For example, annuities can have high fees that reduce returns. These accounts are also complex, which can be difficult to understand. Many experts caution investors against placing too much of their retirement into an annuity because of these fees and long-term costs.

Why more retirees are interested in guaranteed income options

Recent data show growing interest in guaranteed income plans for retirement. A recent survey found that 93% of 401(k) plan holders say having the option to choose guaranteed lifetime income is important. A few factors contribute to the growing interest in these plans. For example, people have longer lifespans now, fewer people have pensions, and with rising costs and inflation, many people are worried about their ability to afford their lifestyles in retirement.

Other retirement assets to consider within a 401(k) plan

Of course, an annuity is not the only option that investors have in their 401(k) plans. Many investors can choose from a variety of funds, from individual stocks to mutual funds. Current legislation underway may also allow cryptocurrency and private equity options in 401(k)s in the future, though these come with volatility risks. Ultimately, employees have several options to choose from when determining what assets to purchase within their 401(k) plans.

Retirement News: Almost 80% of Americans fear a retirement age increase — here’s the real reason why

How to learn more about annuity options within a 401(k) plan

The first step to learning more about annuity options within a 401(k) plan is to see whether or not your employer plans to offer these in the future. Take the time to read the fine print and understand how much your annuity costs and how much you will get in guaranteed income. Make sure to pay close attention to the fees and payout structures, and consult a financial advisor if you have any questions.

Bottom line

Most people are working towards a stress-free retirement one day, and annuities can offer a guaranteed income that helps reduce stress and worry about whether retirement funds will last. However, these funds can also come with high fees. So, the employee should carefully consider all of their options before choosing one for their 401(k).

More from FinanceBuzz: