New Annuity Option Helps People Secure Their Future

In response to the need for greater flexibility for owners of qualified assets, Massachusetts Mutual Life Insurance Company (MassMutual) has expanded its deferred income annuity product offering by making it available as a qualified longevity annuity contract (QLAC).

A QLAC is a deferred income annuity offered by an insurance company that allows distributions to begin after age 70 ½. Approved in 2014 by the IRS and the U.S. Department of the Treasury, new rules allow owners of qualified assets to delay receiving distributions from the assets in a QLAC up until a maximum age of 85; once distributions begin, all standard RMD rules apply.

Because of strict IRS limits on how a QLAC can be established and funded, this option isn’t right for everyone. However, when it is set up and maintained correctly, a QLAC may help the owner to:

• Supplement Social Security retirement benefits or pension benefits with a predictable stream of future income.

• Transfer some of the risks associated with longevity to the insurer. Future income is guaranteed, no matter how long the owner lives or what happens in the financial markets.

• Manage RMDs and plan for expenses that may become a priority later in retirement (such as increased health care costs).

“No matter how you envision retirement, having the freedom to live life your way will depend, at least in part, on having a secure source of income you cannot outlive,” said Craig Waddington, actuary and head of retail solutions deployment at MassMutual. “Although no one can predict the future with 100% accuracy, there are steps you can take today to prepare for a more secure and comfortable future, no matter how long your retirement lasts.”