What is a primary advantage of using a variable annuity in retirement plans?

The choice of diverse funding choices for employees as the primary advantage of using a variable annuity in retirement plans underscores the flexibility and investment growth potential these products offer. Variable annuities allow individuals to tailor their investment portfolios according to their risk tolerance and financial goals.

This means that investors can select from a range of investment options, including stocks, bonds, and mutual funds, which can adapt to different financial situations and market conditions. This diversity permits participants to seek growth potential through equity investments while managing risk through fixed-income choices. As a result, a variable annuity can be a powerful tool in retirement planning, accommodating various strategies for wealth accumulation in response to the changing economic landscape.

The other options do not reflect the primary advantage of variable annuities. Fixed contributions without risks suggest a guaranteed investment, which does not align with the nature of variable annuities that carry market risk. Simplicity in enrollment procedures is not a distinctive feature of variable annuities compared to other investment products. Lastly, guaranteed returns regardless of market performance contradicts the fundamental characteristic of variable annuities, where investment returns are tied to market performance and thus can fluctuate.