Deferred Annuities from MetLife

Overview
FAQ
Glossary

Overview

If I want to build up my retirement fund and enjoy a guaranteed income for the rest of my life.

Deferred annuities can be a great choice for building a tax-deferred retirement nest egg - especially if you want to save more than you might with IRAs and 401(k) Plans.

Deferred annuities have two phases:

savings and investment, where your earnings accumulate tax-deferred and you generally have access to your money*
income, where you convert your account balance into a guaranteed stream of income (annuitize) that you can live on the rest of your life; any remaining assets can be invested to grow your overall portfolio

Here are two kinds of deferred annuities:

Deferred fixed annuity, which gives you a steady, fixed return on your money.
For a single-premium annuity, see MetLife's Preference Guaranteed Select® Deferred Fixed Annuity. For a flexible premium annuity with a first-year 4.00% interest rate bonus, see MetLife’s Preference Flex Select® Deferred Fixed Annuity.
Deferred variable annuity, which gives you investment flexibility and potential growth. Learn more about variable annuities.

Did You Know?

With most deferred annuities, your money is always available to you*
Variable deferred annuities may offer optional "living benefits", for a fee, to help protect your account balance, future income and death benefits from market fluctuations.

If you have more questions, or if you're ready to make deferred annuities part of your personal
retirement plan, have a MetLife Representative contact you.

FAQ

What is an annuity?

An annuity, in it's simplest form, is a stream of payments. It may last your lifetime, like a pension, or some other specified period. Payments may start now (an immediate annuity), or at some time in the future (a deferred annuity).

What is an immediate annuity?

With an immediate annuity (or income annuity), you generally pay the insurer a single amount in exchange for payments that begin immediately (within 12 months). Payments must be no less frequent than annually. Payments continue for your entire lifetime, or for some other duration offered by the insurer, such as the joint lifetimes of you and another person, or a specified number of years. Depending on the option you choose, there may also be a death benefit, where payments may continue to your beneficiary for some time after you die. Immediate annuities can be either fixed, with generally unchanging payments, or variable, where payment amounts will vary based on the performance of underlying investments.

What is a deferred annuity?

A deferred annuity is a type of personal account intended for long-term savings goals, like retirement. Unlike an immediate annuity, income payments are optional and are deferred until a future time. Deferred annuities have two phases: the savings and investment phase, where your earnings accumulate tax-deferred, and the income phase, where you can receive regular payments for your lifetime or another period. Deferred annuities typically allow withdrawals during the savings and investment (or accumulation) phase, and entering into the income phase is typically optional. Early withdrawal charges and ordinary income taxes apply at withdrawal, and tax penalties for withdrawals before age 59 1/2 may apply. There are two types of deferred annuity: fixed and variable.

What is a deferred income annuity?

A deferred income annuity is a type of deferred annuity whose features are designed to help maximize your future income. It's sometimes called "longevity insurance." Flexibility during the accumulation phase (such as the availability of withdrawals) may be limited in exchange for guaranteed payments during the income phase.

What is the difference between a fixed deferred annuity and a variable deferred annuity?

Fixed annuities generally offer lower risk and lower growth potential, while variable annuities can offer greater growth potential in return for increased risk.

	Fixed annuities generally offer lower risk and lower growth potential, while variable annuities can offer greater growth potential in return for increased risk.

	Variable annuities offer more growth potential in return for a higher level of risk. Variable annuities can offer investment choice and flexibility through a variety of professionally-managed investment portfolios. These portfolios generally include stock and bond portfolios, ranging from conservative to aggressive risk levels. The value of a variable annuity will fluctuate, depending on how the investment options perform.

Are earnings within a deferred annuity taxed before withdrawn?

No, not until you withdraw them (except for "non-natural persons", e.g., a business).

How are withdrawals from a deferred annuity taxed?

Your annuity's earnings, when withdrawn, are taxed as ordinary income. Your contributions, when withdrawn, are not taxed. For taxation purposes, withdrawals are treated as coming from earnings first, then contributions. Withdrawals of earnings prior to age 59 1/2 are generally subject to an additional 10% tax penalty. There are additional rules and exceptions; see your tax advisor for more details. More information is also available in IRS Publication 575, Pension and Annuity Income.

How are payments from an immediate annuity taxed?

No tax is payable until you receive a payment. Generally, each payment is partly allocable to your original contribution; that part of the payment is not taxed. The rest of the payment is taxable as ordinary income. There are additional rules and exceptions; see your tax advisor for more details. More information is also available in IRS Publication 575, Pension and Annuity Income.

Is an annuity appropriate for my IRA?

It can be. An immediate annuity can provide guaranteed income for your whole life. People often buy deferred annuities because they are tax-deferred. But since IRAs are already tax-deferred, there is no tax-related reason to use a deferred annuity for your IRA. But you may consider a deferred annuity for your IRA because of the annuity's other features. For example, a deferred fixed annuity may offer an attractive interest rate. A deferred variable annuity might offer guarantees that ensure a minimum available withdrawal or income amount despite market downturns, or a minimum death benefit that, in the event of poor investment performance, may be much higher than the account balance. And both can be converted to income you can't outlive.

Glossary

After Tax Savings

Term used to describe investments or contracts purchased with money that has already been taxed. Also known as "non-qualified" investments or contracts.

Annuitant

The person on whose life the annuity income payments are based. The contract owner decides who the annuitant will be. The contract owner and the annuitant are often the same person.

Annuitize

To convert the account balance under a deferred annuity contract into a stream of income, either for one or more lifetimes or a specific period of time for you or you and another person.

Annuity

A tax-deferred contract issued by an insurance company that can provide an income for a specified time period, such as a number of years or for life. There are two types of annuities: deferred annuities, which allow you to grow your assets tax deferred and convert your account balance to income payments at a later date, and immediate annuities, which generally allow you to receive income payments right away (but no later than 12 months after issue).

Asset Allocation

A financial strategy for investing money into various asset classes — such as stocks, bonds and cash — based upon your financial goals, risk tolerance and time horizon. Asset allocation has two main advantages: it can help increase investment returns and reduce risk.

Beneficiary

Generally, the person(s) who receive(s) money upon the death of the annuity's contract owner or annuitant. The contract owner decides who the beneficiary will be.

Contract Owner

The person(s) or entity who purchases the annuity and has all rights to the contract. This person can do things such as make withdrawals, name the annuitant (usually the contract owner) and the beneficiary, and in a variable annuity such as the Preference Plus Select, make investment decisions and transfer money among funding options.

Death Benefit

The guarantee that if you should die before you convert your variable annuity into regular income payments (annuitize your contract), your annuity's beneficiaries will receive the higher of the account value or a different amount specified in the deferred annuity (such as the amount you contributed to the annuity, less withdrawals). A variable annuity may offer additional guarantees that help protect the death benefit against market downturns.

Deferred Annuity

A type of personal retirement account issued by an insurance company that provides tax-deferred savings for long-term goals, such as retirement. When you are ready to receive income payments, the deferred annuity provides many choices, including guaranteed income for life. There are two types of deferred annuities: fixed and variable.

Deferred Income Annuity

A type of Deferred Annuity that offers limited flexibility during the deferral or savings phase (e.g., limited or no availability of withdrawals) in return for guaranteed payments during the income phase. Sometimes called "longevity insurance."

Diversification

A financial strategy to help reduce risk by spreading your assets across different asset classes, such as stocks and bonds, or across different types of securities within the same asset class. For example, you can diversify your stock holdings into stocks of different industries.

Fixed Deferred Annuity

A tax-deferred annuity that guarantees you will earn stated or declared rates of return during the savings phase. When you convert this money into income payments, you will receive a fixed amount of income on a regular schedule. You may also generally be able to receive a lump sum at retirement in lieu of income payments.

Flexible Premium Annuity

A deferred annuity that accepts multiple purchase payments, which can usually be made at any time (as opposed to a single premium).

Free Look Period

Period of time after an annuity contract is delivered (usually between 10 and 30 days) when the owner may cancel the contract and receive either their initial payment or the current value of the annuity contract. State rules vary.

Immediate Annuity

An annuity contract that you generally buy with a lump sum and from which you begin receiving income within a short period, always within 12 months. An immediate annuity can be either fixed or variable. Payments must be no less frequent than annual. Often called an "income annuity."

Income Options

The various ways to receive income payments that an annuity contract offers. Many annuities offer a variety of options you can choose from, including guaranteed income for life.

Income for a Guaranteed Time Period Annuity

An annuity income option that guarantees payments for a specific time period, usually from 5 to 30 years*. If the annuitant dies before all payments have been made, then the owner (or beneficiary if the owner is deceased) will receive the balance of payments for the rest of the guaranteed period. You may be able to choose fixed or variable payments, depending on the annuity. Sometimes called a Period Certain.

Income for Life Annuity

An annuity income option that guarantees income for the life of the annuitant, no matter how long he/she lives. The amount of the payment depends on your account value and the life expectancy of the annuitant. The payment amounts may be fixed or variable, depending on the annuity.

Income for Life with a Guaranteed Time Period Annuity

An annuity income option that guarantees payments for the annuitant's life, with a guaranteed number of years**. If the annuitant dies during the guaranteed period, payments will continue to the annuity's owner (or beneficiary if the owner is deceased), for the remainder of the period. Many annuities also offer this option for the lives of two annuitants. You may be able to choose fixed or variable payments, depending on the annuity. Sometimes called Life With Period Certain, or Life With [X] Years Period Certain.

Income For Two Lives Annuity

An annuity income option that guarantees income for the lives of two annuitants. After one annuitant dies, payments continue if the other annuitant is alive. Payments stop once both annuitants are no longer alive. Payments after the first annuitant's death may be the same, or lower, depending on what was selected at the time of purchase. You may be able to choose fixed or variable payments, depending on the annuity. Sometimes called Joint and Survivor.

Individual Retirement Account/Annuity (IRA)

An IRA is a type of account to which individuals with earned income (and their non-working spouses) can make tax-deductible contributions up to a specified maximum amount. Growth within the account is tax-deferred; however, withdrawals are generally taxed as ordinary income. A 10% tax penalty generally applies to withdrawals prior to age 59½. Withdrawals must begin by the April 1st following attaining age 70½. Eligibility to contribute and deduct contributions from taxable income is subject to rules based on such things as earned income, age and participation in employer-sponsored retirement plans. Often called a "Traditional IRA." (See also Roth IRA)

Non-Qualified Annuity

A tax-deferred annuity generally purchased by individuals with after-tax dollars, rather than as part of a tax qualified retirement plan such as an IRA.

Prospectus

The legal document that provides detailed information about your variable annuity contract. It must be given to every person who is offered to buy a variable annuity contract.

Purchase Payments

The contribution(s) made to an annuity. Some annuities allow you to make a single contribution, and some allow you to make multiple contributions on a regular basis, or anytime you like.

Qualified Annuity

An annuity contract you generally buy with pre-tax dollars as part of a tax-qualified retirement plan.

Renewal Rate

The new declared interest rate for money that has completed the initial guaranteed interest rate period. In a fixed deferred annuity, for example, the interest rate on your contract may be renewed periodically, usually every year, to reflect current market conditions.

Roth IRA

A Roth IRA is a type of IRA where your contributions are not tax-deductible but withdrawals are tax-free after age 59½ (assuming certain conditions are met). Like a Traditional IRA (see "Individual Retirement Account/Annuity"), your eligibility to contribute and contribution limits are based on earned income and age. Unlike a Traditional IRA, no withdrawals are required at age 70½.

Surrender Charge: — See Withdrawal Charge Tax-Deferred

In a tax-deferred investment such as an annuity or a Traditional IRA, no current tax is payable on gains within the investment; no taxes are due until you make withdrawals. This is different from Tax-Free, where withdrawals are not taxable, as with a Roth IRA.

Tax-Deferred

Tax-Free Transfers

The ability to move money between the investment choices and fixed account within a variable annuity without incurring current taxes. In most annuities, these transfers are free of charge. However, additional restrictions may apply.

Tax-Sheltered Annuity

A tax-deferred annuity available only to employees of schools, nonprofit hospitals and certain other tax-exempt organizations in which your contributions are made through payroll reduction on a pre-tax basis (up to certain limits). All earnings grow tax deferred until such time as you make any withdrawals. Often called a 403(b) annuity.

Variable Annuity

A type of annuity in which the account balance may fluctuate based on the value of underlying investments such as stocks and bonds. The contract owner has the ability to allocate money among several available investment choices. The contract owner, not the insurance company issuing the contract, assumes investment risks.

Variable Immediate Annuity

An income annuity that begins providing income payments right away, or soon after purchase. The amount of the payments may increase or decrease based upon the performance of the investment choices that you select.

Withdrawal Charge

The charge imposed by an annuity issuer for early withdrawal. The withdrawal charge will be described in the annuity contract. Most annuities allow some withdrawals without this charge (10% of your balance each year is typical). Withdrawal charges also typically decline over time, eventually reaching zero.

Withdrawals

Money that you withdraw from your annuity. In a deferred annuity, you can generally make full or partial withdrawals, although a withdrawal charge may be imposed and ordinary income taxes. A tax penalty on earnings for withdrawals before age 59 ½ may also be imposed.

* Early withdrawal charges may apply. Ordinary income taxes generally apply to withdrawals and income payments. A 10% tax penalty generally applies to withdrawals prior to age 59 1/2. For Deferred Income Annuities, MetLife's Longevity Income Guarantee (Personal Income Builder in some states) Standard Version offers a one-time opportunity to withdraw a partial or full commuted value, however the Maximum Income Version does not allow for any withdrawals and income payments cannot start earlier than age 85.

** Duration of guarantee time period may be limited by tax law restrictions.

Variable annuities are offered by prospectus only, which is available from your registered representative. You should carefully consider the product's features, risks, charges and expenses, and the investment objectives, risks and policies of the underlying portfolios, as well as other information about the underlying funding options. This and other information is available in the prospectus, which you should read carefully before investing. Product availability and features may vary by state. All product guarantees are based on the financial strength and claims-paying ability of Metropolitan Life Insurance Company, New York, NY 10166.

Pursuant to IRS Circular 230, MetLife is providing you with the following notification: The information contained in this document is not intended to (and cannot) be used by anyone to avoid IRS penalties. This document supports the promotion and marketing of insurance products. You should seek advice based on your particular circumstances from an independent tax advisor.

MetLife, its agents, and representatives may not give legal or tax advice. Any discussion of taxes herein or related to this document is for general information purposes only and does not purport to be complete or cover every situation. Tax law is subject to interpretation and legislative change. Tax results and the appropriateness of any product for any specific taxpayer may vary depending on the facts and circumstances. You should consult with and rely on your own independent legal and tax advisers regarding your particular set of facts and circumstances.

Annuities issued by Metropolitan Life Insurance Company (MLIC), New York, NY 10166 and distributed by MetLife Investors Distribution Company (MLIDC) (member FINRA) 5 Park Place Plaza, Suite 1900, Irvine, CA. 92614.

Securities, including variable products, are offered through MetLife Securities, Inc. (MSI)(member FINRA/SIPC). 200 Park avenue, New York, NY 10166. MLIC, MLIDC and MSI are MetLife Companies.

Like most annuity contracts, MetLife's contracts contain surrender charges, exclusions, limitations and terms for keeping them in force. See your MetLife Representative for complete details.

Deferred Annuities