| MainStay Lifetime Income Annuity |
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The MainStay Lifetime Income Annuity* provides protection against outliving one's resources. It provides your clients with a stream of guaranteed income payments for the rest of their lives, no matter how long they live. They can also choose from several alternatives that enable them to structure their income stream to meet unique needs.
Retirement Challenges
Before or during retirement age, clients may have several concerns in addition to making sure their money last, including:
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Seeking a way to make sure they don't outlive their income; |
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Looking to insulate income from the ups and downs of the stock market; |
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Worrying about the effect that inflation may have on purchasing power; |
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Interest in providing a legacy for heirs; |
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Searching for a product that allows access to money periodically; |
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Looking to convert a 401(k) or other employer-sponsored plan into a stream of income; or |
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Entrusting their future to a financial services leader they can count on. |
Income Solutions to Help Provide Peace of Mind
The MainStay Lifetime Income Annuity provides your clients with:
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Guaranteed payments for a lifetime and the lifetime of a loved one, too; |
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Steady income that will not fluctuate with changes in the financial markets; |
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An option for income payments to increase annually to offset the effects of inflation; |
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The ability to provide a cash benefit to beneficiaries if one dies prematurely; |
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An option to increase or decrease your income payments at a future date to help adjust your retirement income; |
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Access to cash1 in the event of an emergency; and |
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The convenience of payments that can be sent by check or directly deposited into a bank account. |
An Annuity Can Provide Tax Advantages
An income annuity can provide tax advantages. The nature of these advantages depends on the type of money used to purchase a policy:
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Tax-Qualified annuities are purchased using "pre-tax" dollars that have accumulated in a 401(k), Keogh, IRA or other pre-tax savings plan. Tax-Qualified annuity payments are fully taxable as ordinary income in the year they are received. However, rolling a qualified plan into an income annuity rather than taking a lump sum distribution will spread the tax liability over many years, which may reduce the total tax liability. |
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An additional benefit gained from purchasing a MainStay Lifetime Income Annuity with Tax-Qualified money is that the income payments received automatically satisfy the Internal Revenue Service's (IRS) requirement that Required Minimum Distributions (RMD) are withdrawn from accounts set up under certain Tax-Qualified plans. The RMD amounts generally must be withdrawn each year after age 70 ½ is reached, and severe penalties are imposed if one fails to withdraw the full RMD amount from pretax plans and policies. A lifetime income annuity may help satisfy the IRS' requirements.
(Please note that if a minimum guaranteed payment period is chosen, it cannot extend beyond the client's life expectancy, as specified in the IRS' Life Expectancy Table, if payments are to satisfy RMD requirements. Also, if a Joint Life policy is elected to cover your client and someone other than your client's spouse, there are additional restrictions that apply in order for the policy to satisfy RMD requirements.) |
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Non-Qualified annuities are purchased using after-tax dollars accumulated in other savings vehicles. Each annuity income payment consists of a taxable income portion and a return of premium portion that is not taxable. The division between taxable and tax-free portions of the payment is determined by IRS rules based on several factors, including life expectancy, the premium paid for the policy (or other cost basis) and any guarantees chosen. Once the "tax-free" payments received equal the policy's "cost basis," all future payments received are 100% taxable as ordinary income. |
The MainStay Lifetime Income Annuity may allow a number of tax benefits. However, the tax treatment of annuity income payments is a complex subject that should be discussed carefully with your clients, so they will understand how purchasing a lifetime income annuity will impact their personal tax situation.
Income Options: Cover One or Two Lives and Leave Heirs a Legacy
The MainStay Lifetime Income Annuity can address many concerns for clients, who can choose from the following:
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Single Life policy provides payments for the remainder of your clients' lives, regardless of how long they live. This option provides the highest income for any given premium. However, payments cease upon their death. |
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Joint Life policy pays an income for as long as the annuitant or one other person—usually a spouse—continues to live. If either annuitant or spouse dies, payments will continue to the survivor for the rest of his or her lifetime. Of course, all else being equal, a given premium amount will provide a lower income if it is designed to last for the lives of two individuals, rather than on one life alone. With this option, payments cease after both have died. There is also the flexibility to choose whether the survivor will continue to receive the same income that was paid while both spouses were alive or only a portion (40% to 99%) of that amount. One might decide, for example, that if one were to die, the survivor would only need 80% of the income that both spouses lived on. A Joint Life policy that pays a smaller income to the survivor will provide a higher income while client and spouse are alive. |
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Single or Joint Life with Period Certain: Another Way to Ensure a Legacy. This policy pays a lifetime income that lasts for either one or two lifetimes (as above), and it also provides a legacy to heirs in the event of premature death. It guarantees a minimum number of years of payments, even if the annuitant (or annuitant and spouse) were to die before the end of that period of time. The guaranteed payment period is selected when purchasing the policy. If the annuitant (or annuitant and spouse, if a Joint Life with Period Certain policy is elected) die before the guaranteed minimum payment period has elapsed, the remaining guaranteed payments will be made to beneficiaries.4 |
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Single or Joint Life with Cash Refund policy pays a lifetime income that lasts for either one or two lifetimes (as above), and it also guarantees that the client and their beneficiaries will get back at least the money paid for the policy. If the annuitant (or annuitant and spouse, if a Joint Life with Cash Refund policy is elected) die prematurely, beneficiaries are guaranteed to receive, in a lump sum, the difference between the premium paid for their policy and the sum of the payments received from the policy.2 |
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Single or Joint Life with Percent of Premium Death Benefit3 policy pays a lifetime income for one or two lives (as above). In addition, when the annuitant (or annuitant and spouse, if a Joint Life with Percent of Premium Death Benefit policy is elected) die, a percentage of the premium payment—either 25% or 50%, selected when purchasing the policy—is paid out to beneficiaries in a single sum. This alternative pays a lower income than one that does not provide payments to beneficiaries. However, it guarantees a legacy for heirs. Furthermore, the amount heirs receive will generally not be subject to taxes. |
Note: The income option chosen, as well as age and gender, will affect the amount of each income payment.
Protection from the Effects of Inflation
Our Inflation Protection5 feature can be chosen. If elected, the initial income will be lower and payments will increase each year by either 3% or 5% (whichever is selected). This annual increase in income may help neutralize the impact of inflation as living expenses increase over time. This option must be elected at the time the policy is purchased.
How Income Payments are Determined
Factors which determine the amount of the payments received, include:
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The amount of premium and the current interest rate environment at the time of purchase. |
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The number of lives the policy covers (either one or two). |
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Age and gender (and those of the other person, for joint policies). |
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Any guaranteed minimum payment, Inflation Protection, change in income schedule, or legacy options selected. |
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The frequency of income payments chosen (monthly, quarterly, semi-annually, or annually). |
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The date on which payments are scheduled to begin.6 |
Make the Most of Your Retirement Income Sources
Our Changing Needs Option7 provides clients with a one-time opportunity to either increase income payments by 1% to 400% or decrease income payments by 1% to 50% any time on or after the third anniversary of the income start date. It is only available on Non-Qualified policies with a single life option and the annuitant must be at least age 59 ½ at the time the income payments begin. The annuitant must be age 80 or younger to elect this option.
The Changing Needs Option can be a particularly effective tool in a retirement income strategy, by providing the opportunity to adjust income to meet changing needs. For instance, it can be used to supplement income during the early retirement years, which will allow one to delay the start of Social Security payments. This allows the receipt of higher monthly payments from Social Security at a later date. Or, if anticipating a current income source expiring down the line (i.e., income from a current part-time job), one can plan to replace that income now.
Withdrawal Features May Help Handle Unforeseen Circumstances
Life income annuities generally do not provide access to money in addition to the scheduled income payments. However, we understand that unexpected circumstances can cause an additional need for money. That's why the MainStay Lifetime Income Annuity includes withdrawal features that provide access to cash in an emergency.
The policy offers two withdrawal features:
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Payment Acceleration8 is designed for short-term cash needs. This feature provides the ability to receive five subsequent payments along with the next scheduled monthly payments-for a total of six months of income payments paid all at once. Note that when this option is exercised, the income payments will not be paid for the next five months. Also, the accelerated payments may be fully taxable.9 Upon attaining at least 59 1/2 years old, the feature can be used twice during the life of the policy. |
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Cash Withdrawal10 is a one-time only withdrawal of money from the policy. The Cash Withdrawal is 30% of the discounted value of the remaining payments expected to be paid based on life expectancy when the policy was purchased or the policy's guaranteed minimum payment period (whichever is longer).11 The amount withdrawn may be fully taxable.9 Cash Withdrawal is only available if the annuity owner is at least age 59 1/2. In addition, the option can only be exercised on the 5th, 10th, or 15th anniversary of the first income payment or upon proof of a significant, non-medical financial loss as specified in the policy.12 Once this option is exercised, future income payments are then reduced by 30%. |
Note: Not all of these options are available on all policies, or to annuitants of all ages.
Policy Fees
A policy fee of $325 is deducted from the premium payment as part of the calculation of income under the MainStay Lifetime Income Annuity policy. If applicable, a state premium tax may also be deducted from the premium payment. The policy fee and any applicable state premium tax will be reflected in the calculation of the income payment.
ANNUITIES
Are Not FDIC/NCUA Insured
Are Not a Deposit
May Lose Value
Have No Bank Guarantee
Are Not Insured by Any Government Agency
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