David Levine, Groom Law Group, answers:
Very good question, there are a few things to be aware of. First, although lump sum distributions are the most common form of distribution (as illustrated by the IRS Interim Report on its 401(k) Compliance Check: See “IRS Issues Interim Report about 401(k) Compliance Questionnaire”), some 403(b) plans still have lifetime annuities (either joint and survivor and/or single life annuities) available to their participants. In fact, unless certain requirements are satisfied (which most 403(b) plans do), ERISA 403(b) plans are required to have annuity forms of payment in the plan.
Second, the IRS recently came out with proposed regulations (http://www.irs.gov/retirement/article/0,,id=255127,00.html) that would allow 403(b) plans to permit participants to by “qualifying longevity annuity contracts” (QLACs) that would not be included in RMD calculations until annuity benefit payments under the QLACs begin.
Third, many vendors now offer lifetime income stream management programs that are designed to help participants select investment options that will support them with a stream of income throughout their retirement. As such, there are many options for 403(b)s to consider. Of course, each option has different features and requirements, so it is important to review these options with an adviser.
NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.