Issues To Consider:
- Whom Should I Name As My Beneficiary?
- Should I Elect A Calculation Beneficiary?
- What Calculation Method Should I Select For Myself
and My Calculation Beneficiary? (If Appropriate)
Probably the most critical decision to make at the time you begin minimum distribution payments is choosing an appropriate beneficiary. You can name primary beneficiaries and contingent beneficiaries. Primary beneficiaries will receive the remaining accumulation upon your death. Contingent beneficiaries will only receive benefits if there are no primary beneficiaries remaining upon your death. The selection of beneficiaries will determine not only who will receive benefits when you die, but can also determine the amount of your payment.
You must choose a primary beneficary when electing the Minimum Distribution Option. You can elect to have the primary beneficiary with the shortest life expectancy, usually the oldest, * as a calculation beneficiary (whose age will be included to determine your payments).
When applying for the Minimum Distribution Option, you can elect to have your payments calculated based on your life expectancy alone or on the joint life expectancy of you and your primary beneficiary with the shortest life expectancy. If you do elect the latter, this person is called your "calculation beneficiary." Since your calculation beneficiary must be the primary beneficiary with the shortest life expectancy, any other beneficiary you name is a "non-calculation beneficiary."
For example, if you name three primary beneficiaries and want to utilize a calculation beneficiary, generally the oldest* primary beneficiary must be your calculation beneficiary. Your payments will then be based on the combined life expectancy of you and your calculation beneficiary, but any survivor benefits payable would be shared by all three of your primary beneficiaries.
* According to Internal Revenue Service mortality tables, the person with the shortest life expectancy is not always the oldest.
If your situaion requires you to name multiple calculation beneficiaries, your Minimum Distribution Option contract can be segregated to allow for this. Multiple MDO contracts would enable you to have a different calculation beneficiary for each. Just remember that if you have more than one primary beneficiary for each contract, your calculation beneficiary will be the person with the shortest life expectancy. You can call our Telephone Counseling Center at 1 800 842-2776, Monday through Friday from 8:00 a.m. to 11:00 p.m. ET and Saturday and Sunday from 9:00 a.m. to 6:00 p.m. ET to discuss your specific situation.
"Calculation Beneficiary" is the primary beneficiary chosen by the participant under the Minimum Distribution Option
whose life expectancy is used in calculating the MDO payment.
How Does a Calculation Beneficiary Compare To A Non-Calculation Beneficiary? Calculation Beneficiary Non-Calculation Beneficiary Life
Is used to determine
Is NOT used to determine
Other payment options are available including a lump sum.
The MDO can be continued.
Other payment options may be available. The remining accumulation is
always available in a lump sum.
In Most cases cannot be changed
once payments begin.* +
Can be changed once payments begin,
with no restrictions.
* A calculation beneficiary can be changed if the existing one is still alive and the new primary beneficiary has a shorter life expectancy. You can also remove the calculation beneficiary as a primary beneficiary. TheMDO payments will still be calculated using the calculation beneficiary life expectancy, but he/she will no longer be eligible to receive death denefits.
+ Naming a subsequent primary beneficiary with a shorter life expectancy will change the calculation beneficiary and accelerate the minimum distribution payment option.
By naming a calculation beneficiary, your payments will be smaller while both of you are alive. This can be advantageous if you're looking to preserve your annuity accumulations. Remember, you can have only one calculation beneficiary for each Minimum Distribution Option contract you own. However, you can name as many non-calculation beneficiaries as you like.
The number of beneficiaries you name can affect the amount paid to each. For instance, if you name only one beneficiary, the full remaining accumulation will be paid to that beneficiary upon your death. But if you name several beneficiaries, upon your death, your beneficiaries will proportionately receive the balance. For this reason, you should specify how the remaining accumulation should be distributed among your beneficiaries.