Regulators have yet to issue guidance on how plan sponsors should handle annuities within their defined contribution plans, but that hasn't stopped many of them from offering a lifetime income option to their retirement plan participants.

Prudential, one of the largest companies offering these types of plans, entered this marketplace six years ago when many companies were phasing out their defined benefit pension plans and that guaranteed stream of income was going away, said Srinivas Reddy, senior vice president of institutional income at Prudential.

The company has seen some momentum in the number of plan sponsors who have expressed interest in a lifetime income option for their retirement plans. "Early momentum was clearly slow. Two years ago, we had 300 plan sponsors," Reddy said. Now that figure is about 7,000 plan sponsors, covering 60,000 individuals and $1 billion in assets.