MetLife Introduces First Longevity Annuity for Its Clients’ Retirements

Retirement Planning

On Monday, July 20, insurance giant MetLife revealed its first longevity annuity for individuals’ retirement accounts, making it the latest firm to take advantage of new rules that allow plan beneficiaries to use insurance products.

According to Investment News, Metlife’s Guaranteed Income Builder will now be available as a qualifying longevity annuity contract (QLAC). A QLAC is a type of deferred-income annuity in which clients buy their contract now, but don’t see their annuity payments until much later in the future — typically during the clients’ retirement years.

By opting for the Guaranteed Income Builder as a QLAC, clients may now choose to defer the required minimum distributions (RMDs) from their qualified IRA until a later time.

“By allowing clients to defer payments from their IRAs, Guaranteed Income Builder as a QLAC gives them a significant level of flexibility to manage both their assets and tax obligations—further enhancing their ability to retire with confidence,” said Elizabeth Forget, executive vice president of MetLife Retail Retirement and Wealth Solutions.

The change is a response to the Treasury Department’s new rules regarding longevity annuities. Individuals may now use up to 25% of their 401(k) or IRA balance or $125,000 — whichever is less — toward the purchase of a longevity annuity. The rules changed last year, in a move to encourage retirees to protect themselves financially and avoid the risk of outliving their retirement savings.

According to the Minneapolis Star Tribune, deferred-income annuities are often most popular among seniors looking to replace the Social Security income of a deceased spouse, or seniors who want to make sure they have enough money to front the costs of long-term care.

Even with the typical annual annuity fee reaching as high as 3%, individual consumers have been opting for deferred-income annuities in droves since the Treasury Department revised its rules. Last year, sales of these annuities hit a record $2.7 billion, a 22% increase from the year before.

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