MetLife Launches Retirement Income Insurance® QLAC
27 May 2015 - 10:57PM
Business Wire
New Longevity Insurance Product for Defined
Contribution Plans
MetLife announced today the launch of the MetLife Retirement
Income Insurance® qualifying longevity annuity contract (QLAC)1.
This deferred income annuity is designed specifically for the
institutional market and is available for qualified defined
contribution (DC) retirement plans.
“Like all deferred income annuities, our new Retirement Income
Insurance QLAC is designed to provide income for the latter part of
retirement and creates a guaranteed income stream when other
retirement income sources are most likely to run short,” says
Roberta Rafaloff, vice president, Institutional Income Annuities,
in Corporate Benefit Funding, MetLife’s institutional retirement
group. “As the leading provider of institutional income annuities
and first company to introduce longevity insurance into the
marketplace in 2004, MetLife has been focused on solutions to
address longevity risk for a long time. By incorporating this new
option as part of their plan, sponsors can help participants ensure
more successful retirement outcomes.”
Plan participants can benefit from allocating a portion of their
DC plan balance to the MetLife Retirement Income Insurance® QLAC.
The portion of the DC plan balance used to purchase the QLAC is
excluded from the funds used to determine the required minimum
distribution (RMD) participants are required to take beginning
after age 70 ½, so participants can defer their income payments to
a later age, with the first income payment beginning at average
life expectancy, at or before age 85. The maximum amount that can
be used for a QLAC is the lesser of 25% of the participant’s
account balance or $125K.
“Historically, deferred income annuities have not been a viable
option for DC plan participants, since they could not defer their
income start date beyond age 70 ½ without incurring a significant
tax penalty due to U.S. Treasury regulations2,” notes Rafaloff. “In
July 2014, the U.S. Treasury issued final regulations on QLACs that
changed this. By excluding the amount used to guarantee income at a
later age, DC plan participants can, for example, have both
immediate income through systematic withdrawals for a portion of
their balance, and guaranteed income for the rest of their lives
once the QLAC begins payment.”
“The final regulations have a significant impact on participants
and help them mitigate the greatest risk they face in retirement:
outliving their assets,” adds Rafaloff. “By lowering the required
annual distribution participants are required to take early in
retirement, more money can remain in the participant’s DC plan with
the potential to grow. And, in addition to that, by deferring
payments to a later age, the participant can maximize the income
amount that is possible when the QLAC’s guaranteed income payments
begin.”
Payment options for the MetLife Retirement Income Insurance®
QLAC include both Lifelong Income for One, which guarantees the
participant will receive fixed payments for as long as he or she
lives, and Lifelong Income for Two, which guarantees that the
participant and his or her spouse will receive fixed payments for
as long as at least one of them lives. The MetLife Retirement
Income Insurance QLAC also offers an optional inflation protection
feature, which increases a participant’s income payments each year.
In an effort to protect a participant’s payments from an increased
cost of living, he or she can choose to have them increase by 1%,
2% or 3% each year.
About MetLife
MetLife, Inc. (NYSE:MET), through its subsidiaries and
affiliates (“MetLife”), is one of the largest life insurance
companies in the world. Founded in 1868, MetLife is a global
provider of life insurance, annuities, employee benefits and asset
management. Serving approximately 100 million customers, MetLife
has operations in nearly 50 countries and holds leading market
positions in the United States, Japan, Latin America, Asia, Europe
and the Middle East. For more information, visit
www.metlife.com.
1 The MetLife Retirement Income Insurance® QLAC has been
approved by New York State. It may not be available in all
states.
2 Any discussion of taxes is for general informational purposes
only and does not purport to be complete or cover every situation.
MetLife, its agents and representatives may not give legal, tax or
accounting advice and this document should not be construed as
such. You should confer with your qualified legal, tax and
accounting advisors as appropriate.
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MetLifeJudi Mahaney, 212-578-7977jmahaney@metlife.com
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