What Will Be Covered in this Review?In this review, we will be discussing the following information regarding the MetLife Retirement Income Insurance QLAC:
- Product type
- Current rates
- Realistic long-term return expectations
- How it is used
- How it is most poorly used
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If you are inching ever closer to retirement, but you still are not sure that you will have enough income to get your through – particularly if you have a long lifespan – then you may want to consider a strategy that will allow you a guaranteed stream of income in the future, along with some nice tax-related benefits now. Throughout the past several years – and particularly as life expectancy has increased overall – one of the biggest worries that retirees and pre-retirees have is not having income when they need it during their golden years. Given today’s uncertain market and economic environment, there are many investors who don’t know where to turn with their money in order to ensure that they will have enough income in retirement. However, one relatively new income generation strategy that some have started using is the QLAC or Qualified Longevity Annuity Contract. A QLAC is a deferred annuity that is funded with an investment from a qualified retirement plan or an IRA (Individual Retirement Account). The annuity provides guaranteed monthly income for the remainder of your life – regardless of how long that may be – and, provided that the annuity you choose is in compliance with IRS requirements, it will also be exempt from the RMS (required minimum distribution) rules until the income payouts start (following the set income start date). These financial vehicles were created by the IRS as a way of allowing retirees a lifetime income stream later in life, while also following the RMD (Required Minimum Distribution) rules (which require that people start taking withdrawals from traditional IRAs and other qualified retirement accounts by the time they turn age 70 1/2). However, as great as this might sound, before you go out and set up a QLAC for yourself (and for the benefit of your spouse, if applicable), there are some things that you need to know – beginning with whether or not the annuity you choose to use for this strategy is the best fit. There is where the Annuity Gator can come in.
Annuity and Retirement Income Planning Information You Can TrustIf this is your very first visit to our website, allow us to welcome you here to AnnuityGator.com. We are a team of experienced financial pros who are highly focused on offering the most comprehensive, and unbiased, reviews of annuities. We’ve been at this for many years – much longer than our competitors, and so we have become a well-known source of annuity information. With that in mind, if you’ve been in the process of looking for more information about annuities via the Internet, then it’s a good possibility that you have noticed there’s a lot of conflicting information out there about these products. This, however, isn’t really a surprise, because there is also a great deal of confusion about how they work, and which type may be best for certain circumstances. But even though there are a plethora of websites that market their annuities to consumers, there are a fair number of these sites that will attempt to “lure” you in by making very enticing claims like:
- High-income payments
- Lowest annuity fees
- Guaranteed lifetime income
- 7 – 8% Rate of Return
The MetLife Retirement Income Insurance QLAC at a Glance
|MetLife Retirement Income Insurance QLAC
|Type of Product
|Qualified Longevity Annuity Contract (QLAC)
Opening Thoughts on the MetLife Retirement Income Insurance QLACWith more than 145 years of experience in the insurance and financial services arena, MetLife possesses a strong and stable presence in terms of financial stability and reputation for serving its clients. The company is a leading innovator and a recognized leader in protection planning, as well as retirement and savings solutions around the globe. Today, MetLife has a strong presence in nearly 50 countries – and the company continues to grow via expansion of its product lines, as well as through mergers and acquisitions. MetLife currently serves approximately 100 million customers worldwide, and its products are trusted by more than 90 of the top 100 Fortune 500 companies in the United States. MetLife is a leading provider of institutional income annuities, and it was the first company to introduce longevity insurance into the marketplace back in 2004. This helps MetLife to be uniquely positioned to offer a wide range of benefits to plan sponsors and participants, such as:
- Consistent Income – This allows individuals to create a guaranteed income stream that is payable later in life, when other retirement income sources may run out.
- Flexibility – This provides individuals with an opportunity to use qualified plan money to buy a QLAC with an income payment start date that works best for them
- Protection – This helps individuals to navigate longevity risk by providing income that lasts a lifetime.
- Security – Security allows individuals to better manage their retirement portfolios and future – knowing how much income they will receive at their selected income payment start date.
Before we get into the gritty details, here are some legal disclosures…This is an independent product review, not a recommendation to buy or sell an annuity. MetLife has not endorsed this review in any way, nor do we receive any type of compensation for providing this review. This review is meant to be an independent review at the request of readers so that they may see our perspective when breaking down the positives and negatives of this particular annuity. Prior to purchasing any type of investment or insurance product, it is important that you do your own due diligence and that you consult a properly licensed professional if you should have any specific questions that relate to your individual circumstances. All names, marks, and materials that were used for this review are the property of their respective owners. For more information on how to compare annuities in order to determine which one may be right for you, click here to obtain our free annuity report.
How MetLife Describes the Retirement Income (RII) QLACMetLife describes the Retirement Income Insurance, or RII, QLAC as a product that protects individuals from outliving their money. In July of 2014, the United States Treasury issued final regulations on qualifying longevity annuity contracts, or QLACA, which are a form of deferred income annuity (DIA) that allows participants to do the following:
- Defer a portion of their guaranteed income payments to a later age, and
- Reduce their defined contribution plan balance subject to required minimum distribution (RMD) rules.
- A longer deferral period – and in turn, a higher income amount when the payments from the QLAC begin.
- A reduced required distribution – which equates to less reportable income.
- Protection against longevity risk, which the remaining assets in the defined contribution plan may continue growing over time.
How an Insurance or Financial Advisor Might “Pitch” this ProductA primary fear today that is on the minds of those who are retired and approaching retirement is running out of money before “running out of time.” With that in mind, deferred income annuities that qualify as QLACs can provide both income and tax benefits, and can, therefore, be mighty appealing. Because of that, it is likely that an insurance or financial advisor would key in on the lifetime income benefit you can get with this contract – as well as the added tax-deferred compounding that can occur with your savings, which can remain in the annuity long past your age 70 1/2. Yet, even though this may seem like an ideal solution to many of your longer-term financial and retirement income concerns when something sounds too good to be true, it oftentimes is. For that reason, it is essential that you know the other side of the story, and what possible “tradeoffs” you may need to make in order to attain QLAC benefits. For instance, there are certain parameters that QLACs must abide by, such as the following:
- Limiting premiums/contributions to the lesser of 25% of your balance, or $125,000
- A specified income start date that must begin on or before your turning age 85
- Annuity income payments that meet the applicable RMD rules
- No cash value, commutation benefit, or other similar features
The Annuity Gator’s End Take on the MetLife Retirement Income Insurance (RII) QLACWhere this product works the best: The Retirement Income Insurance (RII) QLAC can provide some nice benefit to those who:
- Anticipate a long lifespan
- Need lifetime income (for themselves and/or themselves and a spouse)
- Want tax-deferred compounding for a longer period of time (i.e., beyond age 70 1/2)
- Do not need income until later in life
- Do not anticipate a long life (i.e., who may already have serious health issues)
- Want or need to start taking income at or before age 70 1/2
- Do not intend to use the lifetime income feature