Retiring from Unum? Here’s What You Need to Know About Your Unum 401k -- 6 Important Questions and Answers for Unum Retirees and Pre-Retirees.

1)     How do I manage withdrawals from my Unum 401k after retiring? 

First of all it is useful to understand the payout options.

a)  You can roll over your 401(k) to an IRA which gives you greater investment flexibility

b)    You may be able to keep your money in the Unum 401(k) Plan and take required mandatory distributions in the year in which you turn 73 (as of this writing on 4/18/25)

Source:https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs#:~:text=You%20must%20take%20your%20first,by%20Dec.%2031%2C%202025.

c)     Managed Retirement Fund: Basically. a target date fund that adjusts its allocation with your age.

d)    Managed Cash Flow: This option allows you to set up automatic withdrawals from your 401(k) account.​ A non-guaranteed (as we understand it) payout on your Fidelity 401(k) that can pay you bi-weekly just like your job.  This means that unlike an annuity – you are not guaranteed a fixed payment amount each year you are alive.

Setting Up Your Distributions (check with Fidelity or Unum Benefits people before acting on this, but according to our research, this may be a way to alter your withdrawal frequency but check with UNUM/Fidelity first because they can verify for you that this is the correct procedure)

To set up your distributions, you may consider using the following approach:

1. Log into Your Fidelity Account: Access your 401(k) account through Fidelity Investments.​

2. Navigate to the Withdrawal Section: Locate the section for setting up withdrawals or distributions.​

3. Select Your Withdrawal Frequency: Choose the frequency that aligns with your previous pay cycles or financial needs.​

4. Specify the Amount: Decide whether you want a fixed dollar amount or a percentage of your account balance to be withdrawn.​

5. Review and Confirm: Ensure all details are correct and confirm your withdrawal setup.​

If you need assistance, Fidelity's customer service or Unum benefits people may be able to help you.

a)    A Guaranteed payout option (basically an annuity within a 401(k).

401(k) annuities can provide guaranteed income for life. But before choosing this option, consider the following:

• Cost: Annuities inside 401(k)s are often cheaper than some but not all annuities available elsewhere.  While we are not aware of the actual annual costs, with insurance costs of the Unum guaranteed income option in the 401(k) it should be available on your participant fee disclosure documents from your 401(k) provider and annuities in competitor 401(k) sometimes have costed around 1.2% a year which may be 20%-100% more expensive than what might be available from some other providers, according to our research.  But the nice thing is that annuities bought within a 401(k) may not have commissions, often making them cheaper than an annuity that you might buy from some insurance agents.

  
  

Despite the undeniable appeal of a check as long as you live, before selecting an annuity or guanteed income in your Unum 401(k) it can be useful to consider the following risks and considerations of guaranteed lifetime income options or annuities generally. For context, most or all investments have risk for the most part so the goal isn't to get no risk typically - it is to be educated and aware of what the actual risks you may be taking if you transfer some or all of your retirement to these products since, in my experience, many people don't seem to have a good understanding of how annuities actually work as a financial product.

Below are three very important risks of many annuities and before you buy one or select the guaranteed lifetime income in your 401(k) you should fully understand to what degree you are 1) bearing inflation risk 2) to what degree the choice is irrevocable and cannot be changed or modified if circumstances change for you and 3) the guarantee is generally only as good as the insurance company (who is making the guarantee) and the state's insurance guarranty association who may back up a portion of that guaranty (in a similar way that the FDIC provides a backup for banks in case they lose your deposit). Like FDIC guaranties, state insurance guaranty associations do not provide unlimited coverage so you'll really want to know what kind of coverage is provided by your state guaranty insurance association.

• Inflation Risk: Many annuities pay a fixed amount. A $100,000 annuity might pay ~$7,310/year (7.31%) at age 65, but inflation can erode that purchasing power significantly over time.

  
  

  A $7,310 annual payment would pay you about $609 for as long as the annuitant or purchaser of the annuity is life.

  
  

  That seems pretty good right? Especially when interest rates are around 4% as of this writing. But the key is that payout if for life, and the annuity company may pay it for one month or they may pay it for 30 years. Additionally, it is critical to know whether the benefits adjust for inflation in any way, because over long periods of time inflation tends to whittle away the purchasing power or the amount that the same amount of money can buy in goods and services.

  
  

  Here is a real example using these facts: $609/month today may only buy $298/month worth of goods by age 85.

  
  

For current rates we are using New York Life’s fixed annuity rates at the time of this writing: 4/18/25.  You may be able to find their current rates here: https://www.nylannuities.com/resources/rates

For current interest rates I'm using the current US Treasury Rates as listed on CNBC: https://www.cnbc.com/bonds/

• Irrevocability: Annuities are typically permanent or at least there are big costs to reverse decisions in them, in my experience. If you pass away soon after purchase, the insurer keeps the funds typically.  So you could buy a $100,000 annuity in your 401(k), pass away tomorrow and your spouse or kids may not get any of that $100,000 – so you can lose in this transaction as well as win.

This is incredibly important to visualize. Imagine you are a 65 year old and you buy a $100,000 annuity is your 401(k) that covers your life. Using current annuity rates lets say the payout is 7.31% of the $100,000 paid back to you per year. You buy the annuity and you pass away 1 month later - after receiving a single $609 monthly payment. So you just traded $100,000 for one $609 monthly payment before you passed. It can work in your favor too - you may get more back than the $100,000 you put in - but it is importnat to know that once you annuitize with many annuities the money if gone forever even if you die the next month or find out 2 months after you annitized that you have a terminal illness and there insurance company isn't likely to pay you back your premium.

• Insurer Risk: Annuities are only as strong as the insurer backing them. Most state guaranty associations cover up to $250,000–$300,000. Insurer failures do happen—over 70 companies have gone under since the 1980s or roughly 2 insurance companies a year have failed on average according to guaranty association data as you can see in the chart below.

Insurance company failures are very rare but not unheard of. In 2024 three insurance companies failed and I had clients who had retired family members who had annuities at some of those companies and their payments stopped once the insurance company went under.

There have been 77 insurance companies that have failed since 1988, or roughly 2 a year. So while the risks may be extremely low that any company that sells you an annuity will default (perhaps the odds are 1 in 1,000 of an insurance company failing or maybe even lower), and there are lots of safeguards and people watching the insurance companies and regulating them, insurance is not full proof - it is only as good as the insurer and the state guaranty association insurance limits that back up the insurer. A few insurance companies fail most years according to the available data. So before putting all your nest egg into an annuity with a single company, I think it is beneficial to understand the risks and go find out your state's insurance guarantty coverage and make sure you are comfortable just getting the guarantty association's coverage if the insurance company that provides your guaranteed income option or annuity goes under.

Really, this is no different than in banking - banks fail too: https://www.fdic.gov/resources/resolutions/bank-failures/in-brief/index and while insurance is not an insanely risky business, it is not full proof either.

I have a number of clients that I work with that are very averse to losses and so they keep more cash in banks than most people, and a strategy that they use is to spread their deposits amongst multiple banks to stay under the FDIC limits for each bank.

A similar strategy in insurance is worth considering, is an annuity or a guaranteed income option is really just a promise from an insurance company to make payments to you for the rest of your life and you and your spouses life if they are in business that long and they don't go bankrupt. If they go out of business, you can't really enforce that promise and then you fall into the state insurance guarantty associations and like the FDIC they have capped limits on how much they'll cover on an annuity. If you buy an annuity that exceeds those state guaranty coverage limits, you may not get all of your money back, even if you are alive, if the value of your annuity exceeded the amount of protection provided in your state.

Just to put the insurer risk in context: here are the 77 insurance companies who have failed since 1988. Not all of them stopped paying on their annuities, but it is illustrative that an annuity is just a promise from an insurer and as long as the insurer is in business you can likely count on that promise in my view. But since the late 1980s, about 77 insurance companies or roughly 2 a year failed, so not every insurance company can keep all their promises. For the vast majority on insurance customers I think this is unlikely to come up, but it has happened before and so it is always a risk that you should be aware when exchanging assets for an annuity or exchanging assets for a guaranteed lifetime income option in a 401(k).

Year	Company Name	State	Notes
2024	PHL Variable Insurance Company	CT
2024	Colorado Bankers Life Insurance Company	NC	Liquidation order issued; appeal pending
2024	Bankers Life Insurance Company	NC	Liquidation order issued; appeal pending
2023	Southland National Insurance Corporation	NC
2022	Time Insurance Company	WI	Liquidation
2022	North Carolina Mutual Life Insurance Company	NC
2017	Penn Treaty Network America Insurance Company	PA
2017	American Network Insurance Company	PA
2015	SeeChange Health Insurance Company	CA
2015	CoOportunity Health	IA
2013	Universal Health Care Insurance Company, Inc.	FL
2013	Executive Life Insurance Company of New York	NY
2013	Lumbermens Mutual Casualty Company	IL
2010	Universal Life Insurance Company	AL
2010	National States Insurance Company	MO
2010	Imerica Life and Health Insurance Company	AR
2009	Old Standard Life Insurance Company	ID
2009	Northwestern National Insurance Company of Milwaukee	WI
2008	Lincoln Memorial Life Insurance Company	TX
2007	Benicorp Insurance Company	IN
2005	States General Life Insurance Company	TX
2004	Western United Life Assurance Co.	WA
2004	Old West Annuity & Life Insurance Company	AZ
2004	Life & Health Insurance Company of America	PA
2004	London Pacific Life & Annuity Company	NC
2003	Villanova Insurance Company	PA
2003	Legion Insurance Company	PA
2003	Investment Life Insurance Company of America	NC
2000	National Affiliated Investors Life Insurance Company	LA
2000	Bankers Commercial Life Insurance Company	TX
1999	Statesman National Life Insurance Company	TX
1999	Franklin Protective Life Insurance Company	MS
1999	Franklin American Life Insurance Company	TN
1999	First National Life Insurance Company of America	MS
1999	Family Guaranty Life Insurance Company	MS
1998	Universal Life Insurance Company	ID
1998	Centennial Life Insurance Company	KS
1998	American Standard Life & Accident Insurance Company	OK
1997	First National Life Insurance Company	AL
1997	American Life Assurance Corporation	AL
1997	American Western Life Insurance Company	UT
1996	Coastal States Life Insurance Company	GA
1995	Supreme Life Insurance Company of America	IL
1995	National Heritage Life Insurance Company	DE
1995	National States Insurance Company	MO
1995	National Affiliated Investors Life Insurance Company	LA
1994	Summit National Life Insurance Company	PA
1994	Pacific Standard Life Insurance Company	CA
1994	Old Colony Life Insurance Company	GA
1994	Old Faithful Life Insurance Company	WY
1994	Old West Annuity & Life Insurance Company	AZ
1994	Kentucky Central Life Insurance Company	KY
1994	Consumers United Insurance Company	DE
1994	Consolidated National Life Insurance Company	IN
1994	Confederation Life Insurance Company (CLIC)	MI
1993	Mutual Benefit Life Insurance Company	NJ
1993	Mutual Security Life Insurance Company	IN
1993	New Jersey Life Insurance Company	NJ
1993	American Integrity Insurance Company	PA
1993	Andrew Jackson Life Insurance Company	MS
1993	Investment Life Insurance Company of America	NC
1992	Guarantee Security Life Insurance Company	FL
1992	Old Faithful Life Insurance Company	WY
1992	Fidelity Mutual Life Insurance Company	PA
1992	Fidelity Bankers Life Insurance Company	VA
1992	Diamond Benefits Life Insurance Company	AZ
1991	Executive Life Insurance Company	CA	Liquidation
1991	Mutual Security Life Insurance Company	IN
1991	Midwest Life Insurance Company	LA
1991	George Washington Life Insurance Company	WV
1991	First Capital Life Insurance Company	CA
1991	Inter-American Insurance Company of Illinois	IL
1991	American Educators Life Insurance Company	AL
1990	Universal Life Insurance Company	AL
1990	Mutual Benefit Life Insurance Company	NJ
1990	Mutual Security Life Insurance Company	IN
1989	Mutual Benefit Life Insurance Company	NJ
1988	Mutual Benefit Life Insurance

Source: https://nolhga.com/the-guaranty-system/insolvent-insurance-companies/#sort=date&order=desc

This article is designed to educate you, so with your own research and the help of your own professional advisors you can make informed choices.   D.R. Harris & Co. is not your financial advisor unless you have a written contract with us. Moreover, in this article we are not recommending or discouraging any specific approach, we are merely providing some information that you may want to consider.  While annuities can provide peace of mind and lifetime income, they come with trade-offs, and it is just important to be an informed financial consumer and know and understand what the potential downsides of the investment are, as well as the potential benefits.

Just so you know, at D.R. Harris & Co., we provide objective, fee-only fiduciary financial advice. We don’t sell insurance or investment products directly and we receive no commissions when our own customers buy products. While we refer clients to licensed insurance agents when insurance is needed, we have no financial stake in those referrals and we do not personally maintain an insurance license so we don’t make insurance recommendations for compensation – this is just education from a neutral, impartial source who has seen these products at work.

Also you should know that reading this article in no way creates an advisory relationship with D.R. Harris & Co. and we are not your financial advisor unless you have a written contract with us.  You must have a written advisory agreement with us to be a client.  While we mostly work with people in the healthcare industry, we will occasionally discuss other 401(k) plans of larger companies where lots of physicians work because some of our clients spouses work for these types of companies, like Unum.  Just for reference, for pre-retirees and retirees, we typically work with clients earning $200k+ annually as a household during their working years or with $800k+ in investment assets, although we make decisions of who to work with on a case by case basis and we don’t have any firm minimums for assets or income.

To learn more about us, click this link: https://www.drharrisandco.com/about-daniel-r-harris

2)    Should I keep my assets in Unum’s 401(k) after retirement or move them elsewhere? 

Benefits of Keeping Your Retirement Funds in the Unum 401(k)

1. Lower Expense Ratios (Slightly): Unum’s 401(k) offers competitive fees. While some funds may be 0.01%–0.02% cheaper than comparable options in an IRA, the cost difference is usually minimal.

2. Strong Creditor Protection: 401(k) accounts have federal-level creditor protection. IRAs offer varying protection depending on state law. For example, Tennessee offers strong protection (confirm this with a TN attorney), while Maine offers less creditor protection outside of a 401(k) (again, you should verify or confirm this information with an attorney with a license to practice law in Maine). However, state differences in creditor protection could influence whether a retiree chooses to keep funds in the Unum 401(k) or roll them over to an IRA.

Although you’d double check this information with your attorney – here is an introductory overview of potential IRA creditor protection by state since the amount of creditor proteciton you get in an IRA versus a 401(k) can vary quite a bit by state: https://www.assetprotectionplanners.com/planning/ira-by-state/

We have not double checked these state rules for accuracy so you should look up the actual laws quoted in the article above or talk to a licensed attorney in your own state to confirm.

3)    As a Unum retiree, how do I ensure my retirement savings last? 

Making your savings last in retirement requires a strategy that balances income, growth, and risk. There’s no one-size-fits-all answer—your personal health, family longevity, lifestyle and spending requirement, the Social Security benefits that you and your spouse have earned, your investment approach, and risk tolerance all play a role.

A good starting point is reviewing your projected Social Security income (found on your annual statement), estimating your living expenses, and understanding your investment options. From there, you can either build your own plan or work with a financial advisor to develop a personalized strategy.

Are Target-Date Funds Enough?

Target-date or managed retirement funds can work for some people, but they take a more "one-size-fits-all" approach. If your situation varies from the the hypothetical person it was designed for in any meaninful way in our view - due to taxes, health needs, spending needs, your tolerance for risk or appetite for growth or spending patterns—they may fall short.

Choosing the Right Level of Financial Advice

Think of financial advice like healthcare—there are different levels of service:

a)     Do-It-Yourself (DIY):If you’re confident managing your own investments, this can be the lowest cost option. But it requires discipline and some knowledge to avoid costly mistakes.

b)     Low-Cost, Standardized Advice (0.20%–0.40% annually) (Usually available by the vendors in your plan – just schedule an appointment with them):

The Real Cost of “Low-Cost” Financial Advice (in our view)

Many 401(k) plans today offer access to low-cost, standardized financial advice—usually somewhere between 0.20% and 0.40% per year. On paper, that sounds like a good deal. And in some cases, it is. But it’s important to understand what you're actually paying for—and what you’re not getting.

These in-plan advisory services are typically based on pre-built portfolios. You schedule an appointment, talk through your goals, and get placed into a model portfolio that looks a lot like an off-the-shelf mutual fund. It’s quick, simple, and designed to scale. But scale is the key word here—because these advisors are often supporting hundreds, if not thousands, of clients at once.

That’s where the trade-offs begin.

Advice Isn’t a Factory Product—It’s a Relationship

Financial advice is a service, not a product. And like healthcare, it’s delivered one-on-one. There are no real economies of scale in advice—just like there aren’t in medicine. A doctor with 1,500 patients might spend 10 minutes per visit. But if that doctor is managing 4,500 patients, your visit might drop to three rushed minutes.

The same logic applies to financial advisors.

If you’re paying less, chances are you’re getting less—less time, less attention, and less personalization. That doesn’t mean the service is bad; it’s just operating on a different model. It's designed to provide “good enough” answers for the most common situations, not deep, customized guidance for more complex ones.

Technology Helps—but Only So Much

Some firms point to technology as the reason they can lower the cost of advice. And yes, technology has dramatically reduced the cost of executing trades or delivering digital account access. But when it comes to actual advice—the human part, the thinking, the judgment—that still happens person to person.

And here’s the kicker: there’s no technology edge when it comes to making good decisions for your life. The real value of an advisor isn’t in how fast they can rebalance a portfolio—it’s in how well they understand your goals, risks, quirks, and questions. And that takes time.

In fact, smaller advisory firms often have the upper hand here. They’re not as constrained by scale, and they’re often more nimble and less conflicted in how they give advice. Big firms, by necessity, tend to steer clients toward products that can absorb large amounts of money—even if those products aren’t ideal for every individual.

So, Is Low-Cost Advice Worth It?

It depends on what you need.

If you’re financially savvy, mostly self-directed, and just want occasional input, then the low-cost, in-plan advisor might be exactly what you need. It’s like getting a flu shot at the pharmacy instead of seeing your primary care doctor—it gets the job done, and it’s convenient.

But if you want deeper guidance—on taxes, on asset allocation, on life transitions or financial decisions outside your 401(k)—you may want to work with an advisor outside the plan. Yes, it might cost more (typically around 1% annually), but it often comes with far more personalization, access, and attention.

In some cases, a DIY approach using a well-constructed target-date fund or low-fee index funds might actually get you most of the way there—for free or close to it.

The Bottom Line

When it comes to advice, the biggest cost savings usually come from giving you less advice. It’s not about better software or smarter algorithms—it’s just fewer minutes and fewer touchpoints per client. And if you're okay with that trade-off, the low-cost model can work.

But in a service business like this—where personalization is everything—it’s wise to remember that you usually get what you pay for. Just like you probably wouldn’t want a doctor rushing through your annual check-up, you might not want a financial advisor juggling thousands of clients when it’s your financial future on the line.

c)      Highly Personalized Advice (think of this like the doctor who spends 10 minutes with you and doesn't ration attention to your challenges or concerns)

This is a custom, hands-on approach—similar to seeing a normal doctor. Advisors take time to understand your specific goals and challenges. While more expensive (or honestly just the normal non-rationed service price for the industry), it may deliver potentially better outcomes for those who have more resources or those who want or would benefit from a normal amount of attention, a more knowledgeable advisor and a more customized approach. These advisors and services are typically offered outside of your 401(k) because these types of financial advisors typically carry a normal client load for the industry, and don't take on 3 times or 10 times as many clients as is typical - so they actualy have time to think about their clients and their problems and concerns.

Ultimately, how you manage your retirement savings depends on how comfortable you are doing it yourself, and how much personalization and attention to your needs that you want from your advisor if you feel like you want professional advice.

4)  Is the Unum 401(k) Good Enough to Stay In Post-Retirement?

In our view, yes—if you’re happy with the available investment options, then the Unum 401(k) offers competitive funds and low fees compared to what’s available elsewhere.

Fund performance depends largely on the underlying investments. For example, if the S&P 500 or Total U.S. Stock Market Index performs poorly, those index funds will too—regardless of the plan. But thanks to its low fees, Unum’s index funds are likely to perform on par with similar options elsewhere, in our opinion, and potentially even better than higher-fee alternatives with the exact same or very similar holdings.

With that said, the main limitation of the Unum 401(k) is the lack of a self-directed brokerage account. Without it, participants are restricted to the plan’s standard fund menu. If those options underperform, your portfolio may be stuck with them.

According to the U.S. Department of Labor, 40% of 401(k) plans with over 5,000 participants offer a self-directed brokerage window. While Unum’s plan is strong overall, this missing feature is why I’d rate it an “A” instead of an “A+++.”

Source: https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/about-us/erisa-advisory-council/2021-understanding-brokerage-windows-in-self-directed-retirement-plans.pdf

At a company like Unum—with highly compensated employees and strong retirement savers—I’d expect that, if a Fidelity BrokerageLink option were offered, about 10% of plan assets (roughly $200 million of the $2 billion plan) could shift into it within 5–10 years, led by the most financially sophisticated participants.

5)    As an Unum Retiree or Pre-Retiree, Where Can I Get Personalized Retirement Planning Advice?

In my admittedly biased view, your best option for truly personalized retirement advice may be working with an independent, fee-only financial advisor—someone who doesn't sell financial products or earn commissions. This doesn't necessarily mean our firm - but fee only fiduciary advice is where to go if you want clear and unbiased advise and guidance in our view. Our firm has been luckily enough to work with nice, humble clients, who just want for them and their families to be looked out for and want to go somewhere where their interests will come first and there is no BS in the approach to advice of teaching.

Many 401(k) plan advisors are affiliated with firms that sell and pitch their own products, which can create conflicts of interest and bias their recommendations.  We think using a fee only fiduciary advisory who is independent of a product selling firm is the best way to get ethical, modern financial advice.

With that said, advisors come in different models: flat-fee, hourly, or asset-based. Regardless of the model, in my view and experience working with lots of professionals across lots of industries, you typically generally get what you pay for. Free advice is often generic, surface-level, or sometimes can steer you toward products that benefit the firm more than you.

That said, not everyone can afford or wants personalized financial planning. If that’s the case, consider doing your own research, talking to trusted peers, or consider using the workplace-provided guidance—it may be better than going it entirely alone if you feel overwhelmed by this stuff or out of your depth.

Think of it like legal defense:

• The best representation comes from someone you pay

• The second-best is from a free public defender.

• The least effective is trying to represent yourself.

  
  

The same logic applies to financial planning—when possible, paying for objective, expert advice is often worth considering, in my view.

6)    What am I actually paying for my Unum 401(k)?  Are the fees too high?  Am I getting value for my money staying in the plan post-retirement?

These are personal opinions, but here’s my take on the Unum 401k Plan in retirement:

Fund Fees:

The fund fees in the Unum 401(k) are generally excellent in my view. While the investment options are limited, due to the current lack of the brokerage window or Fidelity BrokerageLink Account in the UNUM 401(k), the available funds are generally strong. If the asset classes perform well, your investments could potentially do well too—but if those sectors underperform, low fees alone won’t save your returns.

Paying for Advice in the Plan:

The advice offered through the 401(k) is often low-cost, but that comes with trade-offs. Your advisor may end of having more customers to look out for than a typical financial advisor creating a need to ration some resources to make that work.  This may lead to a more cookie-cutter one sized fits most approach when it comes to your needs.  Finally, there is an inevitable conflict of interest when the advisor and the product maker are from the same company.  Are they recommending products because they are good for you or they are good for their firm?  Whenever you use the same company for advice and products – you’ll never be able to know for sure whether you are getting advice that is in your best interest or if it is in their firm’s best interest. 

When discussing in plan advice, I rarely mention the companies that provide the advice. The reason why I don't mention the companies is that in this context, the work from most in plan advisors is very similar. The firms that provide the advice are not that important, in my view.

There is trully a difference between various investment product makers (some firms like BlackRock, Fidelity, Robinhood, and Vanguard) have products that really stand out in terms fo quality versus their peers but the plan advisors are all pretty much the same from what I've seen in terms of the recommendations they make and how involved they've been with customers who worked with us, before they became out clients.

So I'm not a huge fan of using the in-plan advisor, compared to the alternatives, but everyone has to make their own choices of do it yourself, rationed help, or full help, depending on what your goals are and how important the quality of the advice is to you.

Ultimately, in my belief, we're all paying for the level of attention and customization we receive. Lower fees usually mean less depth, attention or customization but also lower fees. For many, that’s fine—but it’s important to understand the trade-off, and select the option that feels right to you.