What is it?
An annuity is a contract between an insurance company and an annuity owner. In exchange for a purchase payment, or series of payments, the insurance company guarantees to pay a stream of income in the future. The income can be guaranteed for a specific period of time or for life.
How is it used?
Funding an individual retirement arrangement requires a long-term investment. A deferred annuity can be broken down into two phases: an accumulation phase and an income phase. During the accumulation phase, the accumulation value of the annuity may grow. Once the contract is annuitized, it begins to pay a guaranteed stream of income for a period of time.
What are the benefits?
The benefits of deferred annuities include payment of guaranteed lifetime income, potential to accumulate savings on a tax-deferred basis and beneficiary provisions.
What are the different types of arrangements that can be funded by annuities to help meet the needs of your business?
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Savings Incentive Match Plan (SIMPLE-IRA)
A written salary reduction arrangement that allows eligible employees to contribute to an Individual Retirement Account (IRA) in their name. Employers are required to make annual contributions for each eligible participant. An annuity may help fund this type of arrangement.
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Simplified Employee Pension Plan (SEP-IRA)
A written agreement that allows an employer to make contributions to IRAs for all eligible employees.
Prefer to speak to someone about annuities?
Guarantees are based on the claims-paying ability of the issuing company.
Annuities are not appropriate for everyone. There are fees and charges associated with owning an annuity. Annuities do not provide any additional tax advantage when use to fund a qualified plan such as an IRA. Investors should consider buying an annuity to fund a qualified plan for the annuity's additional features, such as lifetime income payments and death benefit protection.
Variable annuities are sold by prospectus. Before purchasing a variable annuity contract, investors should carefully consider the investment objectives, risks, charges and expenses of the variable annuity contract and its underlying investment choices. For this and other information, obtain the applicable product prospectus and the underlying investment choices prospectus from your registered representative or click here for our financial documents . The prospectuses should be carefully considered before investing or sending money.
Principal Underwriter (variable annuities): MML Distributors, LLC, 1295 State Street, Springfield, MA 01111-0001, a wholly owned subsidiary of Massachusetts Mutual Life Insurance Company.
This information is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any federal tax penalties. MassMutual, its employees and representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel.
Distributions may be subject to income tax, a contingent deferred sales charge or a surrender charge. If taken prior to age 59 ½, a 10% federal income tax penalty may apply.
