What is a deferred annuity?


An annuity is a contract between you and an insurance company. You purchase an annuity contract by making either a single payment or a series of payments. A deferred annuity allows you to defer your income payments and to accumulate money on a tax-deferred basis for long-term goals such as retirement. When you are ready to receive income from your annuity, you can withdraw funds as needed, or you can set up a regular annuity income payment schedule that would last for life or over a given time period in the same manner as immediate annuities.


The Accumulation Phase


Your payment into an annuity is called a Purchase Payment because you are buying an annuity contract. Once you’ve made the initial Purchase Payment, your annuity will have two phases: the accumulation phase, when your money has the potential of growing tax deferred, and the income or payout phase, when you withdraw your money according to a choice of payment options. During the accumulation phase, a fixed annuity will earn a guaranteed minimum interest rate for a certain period of time. In contrast, the value of a variable annuity will fluctuate according to the performance of the selected investment options.


Withdrawing Your Money


Deferred variable annuity products offer varying degrees of liquidity. A Withdrawal Charge or Surrender Charge is a fee you will pay if you cancel your annuity contract within the specified contract period. The withdrawal charge or surrender charge is a descending fee that generally is reduced by one percent each year as the contract approaches maturity. If you withdraw money during the early years of the contract (usually the first seven or eight years), the issuing company may keep a certain percentage of your withdrawals. Products with a shorter withdrawal charge or surrender charge will generally have higher surrender charges. If you need to access your money during the accumulation phase, some contracts allow you to take partial withdrawals without a contract charge.


For tax purposes, withdrawals are considered as first coming from earnings, then from the return of investment. Earnings in your annuity contract are taxed as ordinary income, and if withdrawn prior to age 591/2, there may also be a 10% federal income tax penalty.


Variable Annuities


What’s your measure of financial freedom?

A variable annuity can help you get there.


Put the power of a variable annuity to work for you.


Tax-deferred investing


Any growth in your investment earnings grows tax-deferred until you make a withdrawal from your annuity or begin to receive annuity income payments.


Choice and flexibility

We offer a range of investment options across asset classes. These investment options are managed by some of the best-known portfolio managers in the industry. Plus, you have the flexibility to exchange money from one investment option to another within your annuity, without paying taxes.


Retirement income


You have many options when the time comes to start drawing income from your variable annuity, including payments guaranteed for life, liquidity to provide you with access to some or all of your funds, and inflation sensitivity.


Living benefits

Prudential Annuities Optional Living Benefits, available at an additional cost, may help protect your principal, provide guaranteed withdrawals and accumulations, or ease your concerns about outliving your income, while you save for retirement.


Death benefits


If you pass away before you annuitize your variable annuity, the issuer will pay a death benefit to your beneficiaries. We also offer optional enhanced death benefits at an additional cost. BMI Group offers a selection of variable annuities to help you meet your retirement goals.


A variable annuity is a long-term investment designed to create lifetime income in retirement. Investment returns will fluctuate and the principal value, when redeemed, may be worth more or less than the original investment. Withdrawals or surrenders may be subject to contingent deferred sales charges. Withdrawals and distributions of taxable amounts are subject to ordinary income tax and, if made prior to age 59 1/2, may be subject to an additional 10% federal income tax penalty. Withdrawals can reduce the living and death benefits and account value.


All guarantees, including optional benefits, are backed by the claims-paying ability of the issuing company and do not apply to the underlying investment options. Guarantees do not apply to the safety or investment performance of the underlying subaccounts in the variable annuity.


Optional living and death benefits may not be available in every state and may not be elected in conjunction with certain optional benefits. Optional benefits have certain investment, holding period, liquidity, and withdrawal limitations and restrictions. The benefit fees are in addition to fees and charges associated with the basic annuity. Please see the prospectus for more information.


Tax deferral is provided by an Individual Retirement Account (IRA) and other qualified retirement plans. A variable annuity contract should be used to fund a qualified retirement plan to benefit from the annuity’s features other than tax deferral, including lifetime income payout option, the death benefit protection, and the ability to transfer among investment options without sales or withdrawal charges.