MTM
METLIFE TARGET MATURITY
MTM, MetLife Target Maturity, is a deferred annuity Contract ("Contract") that
provides a guaranteed fixed rate of return for your investment if you do not
surrender your Contract before the Guarantee Period ends. Generally, if you do
surrender your Contract before the Guarantee Period ends, your Cash Value will
be subject to a market value adjustment and surrender charges.
This prospectus explains:
- the Contract (single purchase payment)
- MetLife Insurance Company of Connecticut, MetLife of CT Separate
Account MGA and MetLife of CT Separate Account MGA II
- the Guarantee Periods and Interest Rates
- Surrenders
- Surrender Charges
- Market Value Adjustment
- Death Benefit
- Annuity Payments
- other aspects of the Contract
This Contract is issued by MetLife Insurance Company of Connecticut. The Company
is located at 1300 Hall Boulevard, Bloomfield, Connecticut 06002-2910. The
telephone number is 1-800-599-9460. MetLife Investors Distribution Company, 5
Park Plaza, Suite 1900, Irvine, California 92614, is the principal underwriter
and distributor of the Contracts.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR THE ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
MUTUAL FUNDS, ANNUITIES AND INSURANCE PRODUCTS ARE NOT DEPOSITS OF ANY BANK, AND
ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENT AGENCY.
PROSPECTUS DATED JANUARY 23, 2009
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
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</Table>
2
SPECIAL TERMS
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In this prospectus, the following terms have the indicated meanings:
ACCOUNT VALUE -- The Purchase Payment plus all interest earned, minus all
surrenders, surrender charges and applicable premium tax previously deducted.
ANNUITANT -- The person upon whose life the Contract is issued.
ANNUITY COMMENCEMENT DATE -- The date on which annuity payments are to start.
The date may be designated in the Contract or elected by the Owner.
BENEFICIARY (IES) -- The person(s) entitled to receive benefits under the
Contract in case of the death of the Annuitant or the Owner, or joint Owner, as
applicable.
CASH SURRENDER VALUE -- The Cash Value less surrender charges, and any
applicable premium tax.
CASH VALUE -- The Account Value at the end of a Guarantee Period or the Market
Adjusted Value before the end of a Guarantee Period.
CERTIFICATE -- Evidence of a participating interest in the group annuity
contract.
COMPANY (WE, US, OUR) -- MetLife Insurance Company of Connecticut.
CONTINGENT ANNUITANT -- The person named prior to the Contract Date by the Owner
who, upon the Annuitant's death (prior to the Annuity Commencement Date) becomes
the Annuitant. All rights and benefits provided by the Contract then continue to
be in effect. Applicable to nonqualified Contracts only.
CONTRACT -- For a group Contract, the certificate evidencing a participating
interest in the group annuity Contract. Any reference in this Prospectus to
Contract includes the underlying group annuity Contract. See Appendix A. For an
individual Contract, the individual annuity Contract.
CONTRACT DATE -- The effective date of participation under the group annuity
Contract as designated in the certificate, or the date of issue of an individual
annuity Contract.
CONTRACT YEAR -- A continuous twelve-month period beginning on the Contract Date
and each anniversary thereof.
FREE WITHDRAWAL AMOUNT -- The interest credited in the previous Contract Year
that is not subject to a surrender charge or a market value adjustment.
GUARANTEE PERIOD -- The period for which either an initial or subsequent
Guaranteed Interest Rate is credited.
GUARANTEED INTEREST RATE -- The annual effective interest rate credited during
the Guarantee Period.
HOME OFFICE -- The principal executive offices of MetLife Insurance Company of
Connecticut are located at 1300 Hall Boulevard, Bloomfield, Connecticut 06002-
2910. The office that administers your Contract is located at 4700 Westown
Parkway, Ste. 200, West Des Moines, Iowa 50266.
MARKET VALUE ADJUSTMENT -- The Market Value Adjustment reflects the
relationship, at the time of surrender, between the then-current Guaranteed
Interest Rate for a Guarantee Period equal to the duration left in your
Guarantee Period, and the Guaranteed Interest Rate that applies to your
Contract.
MATURITY VALUE -- The accumulated value of a Purchase Payment at the Guaranteed
Interest Rate at the end of the Guarantee Period selected, minus all surrenders,
surrender charges and premium taxes previously deducted.
OWNER (YOU, YOURS) -- For an individual Contract, the person or entity to whom
the individual Contract is issued. For a group Contract, the person or entity to
whom the certificate under a group annuity Contract is issued.
PURCHASE PAYMENT -- The premium payment applied to the Contract less premium
taxes if applicable.
SEPARATE ACCOUNT -- The separate account is MetLife of CT Separate Account MGA
and MetLife of CT Separate Account MGA II.
3
WRITTEN REQUEST -- Written information sent to us in a form and content
satisfactory to us and received at our Home Office.
SUMMARY
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MetLife Target Maturity is a single purchase payment modified guaranteed
annuity. Modified Guaranteed Annuities offer a guaranteed fixed rate of return
on your principal investment if you do not surrender your Contract before the
Guarantee Period ends. If you do surrender your Contract before the end of the
Guarantee Period, generally your Cash Value is subject to a Market Value
Adjustment and Surrender Charge.
The Contract is offered by MetLife Insurance Company of Connecticut (the
"Company", "We" or "Us"). MetLife Insurance Company of Connecticut is a wholly-
owned subsidiary of MetLife, Inc. The Contract is available only in those states
where it has been approved for sale.
You may select an initial Guarantee Period from those available from the
Company. Currently, we offer Guarantee Periods up to ten years. Interest on the
Purchase Payment is credited on a daily basis and so compounded in the
Guaranteed Interest Rate. (See "Guarantee Periods" and "Establishment of
Guaranteed Interest Rates.")
At the end of each Guarantee Period, a subsequent Guarantee Period of one year
will automatically begin unless you elect another duration within thirty days
before the Guarantee Period ends.
You may surrender your Contract, but the Cash Value may be subject to a
Surrender Charge and/or a Market Value Adjustment. A full or partial surrender
made prior to the end of a Guarantee Period will be subject to a Market Value
Adjustment. The surrender charge may be deducted from any surrender made before
the end of the seventh Contract Year. The surrender charge is computed as a
percentage of the Cash Value being surrendered.
<Table>
<Caption>
CONTRACT YEAR CHARGE AS A
IN WHICH SURRENDER PERCENTAGE OF
IS MADE CASH VALUE
- ------------------ -------------
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
Thereafter 0%
</Table>
There is no surrender charge for full or partial surrenders: (1) at the end of
an initial Guarantee Period of at least three years, or (2) at the end of any
other Initial Guarantee Period if the surrender occurs on or after the fifth
Contract Year. We may waive surrender charges in certain instances. (See
"Surrenders -- Waiver of Surrender Charge".)
There is no Market Value Adjustment if you surrender at the end of a guarantee
period. Any such surrender request must be in writing and received by us within
30 days before the Guarantee Period ends. You may request any interest that has
been credited during the prior Contract Year. No surrender charge or Market
Value Adjustment will be imposed on such interest payments; however, all
applicable premium taxes will be deducted. Any such surrender may also be
subject to federal and state taxes. (See "Surrenders and Federal Tax
Considerations.")
The Market Value Adjustment reflects the relationship between the current
Guaranteed Interest Rate for the time left in the Guarantee Period at surrender
and the Guaranteed Interest Rate that applies to your Contract. The Market Value
Adjustment amount primarily depends on the interest rates the Company receives
on its investments when the current Guaranteed Interest Rates are established.
The Market Value Adjustment is sensitive, therefore, to changes in interest
rates. It is possible that the amount you receive upon surrender may be less
than your original Purchase Payment if interest rates increase. It is also
possible that if interest rates decrease, the amount you receive upon surrender
may be more than your original Purchase Payment plus accrued interest.
4
On the Annuity Commencement Date specified by you, the Company will make either
a lump sum payment or start to pay a series of payments based on the Annuity
Options you select. (See "Annuity Period".)
The Contract may provide for a death benefit that is the Account Value on the
date we receive written notification of death. If the Annuitant dies before the
Annuity Commencement Date with no designated Contingent Annuitant surviving, or
if the Owner dies before the Annuity Commencement Date with the Annuitant
surviving, we will pay the death benefit to the Beneficiary. We calculate the
death benefit as of the date the Home Office receives written notification of
due proof of death. (See "Death Benefit".)
We will deduct any applicable premium taxes from the Cash Value either upon
death, surrender, annuitization, or at the time the Purchase Payment is made to
the Contract. (See "Surrenders -- Premium Taxes".)
THE INSURANCE COMPANY
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MetLife Insurance Company of Connecticut is a stock insurance company chartered
in 1863 in the state of Connecticut and has been continuously engaged in the
insurance business since that time. It is licensed to conduct life insurance
business in all states of the United States, the District of Columbia, Puerto
Rico, Guam, the U.S. and British Virgin Islands and the Bahamas. The Company is
a wholly-owned subsidiary of MetLife, Inc., a publicly traded company. MetLife,
Inc., through its subsidiaries and affiliates, is a leading provider of
insurance and other financial services to individual and institutional
customers. The Company's home office is located at 1300 Hall Boulevard,
Bloomfield, Connecticut 06002-2910. The office that administers your Contract is
located at 4700 Westown Parkway, Ste. 200, West Des Moines, Iowa 50266.
THE CONTRACTS
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APPLICATION AND PURCHASE PAYMENT
For the Company to issue a Contract to you, you must:
- Complete an application or an order to purchase;
- Include your minimum Purchase Payment of at least $5,000; and
- Submit both to our Home Office for approval.
The Company may:
- Accept Purchase Payments up to $1 million within a 12 month period
without prior approval;
- Contact you or your agent if the application or order form is not
properly completed; and
- Return your entire application or order form and Purchase Payment if
not properly completed.
We accept Purchase Payments made by check or cashier's check. We do not accept
cash, money orders or traveler's checks. We reserve the right to refuse purchase
payments made via a personal check in excess of $100,000. Purchase payments over
$100,000 may be accepted in other forms, including but not limited to, EFT/wire
transfers, certified checks, corporate checks, and checks written on financial
institutions. The form in which we receive a purchase payment may determine how
soon subsequent disbursement requests may be fulfilled.
From approximately November 24, 2008, through January 22, 2009, the Contract was
offered when there were no registered units available for the Contract. If you
purchased the Contract during this time period, the security you purchased was
not registered under the Securities Act of 1933, as amended (the "Securities
Act"), even though you received a prospectus which described the features of the
Contract. The Company has since registered the units under the Securities Act
that were offered on an unregistered basis, as well as additional units to cover
future anticipated sales. If you purchased a Contract during the time period
mentioned above, then as of the date of this prospectus, you are now purchasing
a Contract with registered units.
5
RIGHT TO CANCEL
Generally, you may return your Contract to us at our Home Office within 10 days
(7 days for IRAs) of delivery of your Contract. Depending on your state, we will
return your Purchase Payment or Cash Value. (If you exercise this right to
cancel we will pay you the Market Adjusted Value plus any premium tax or
Contract charges within 10 days after the Contract is returned.) Please refer to
your Contract for any additional information.
6
GUARANTEE PERIODS
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You will select the duration of the Guarantee Period and corresponding declared
Guaranteed Interest Rate. Your Purchase Payment will earn interest at the
Guaranteed Interest Rate during the entire Guarantee Period. All interest earned
will be credited daily; this compounding effect is reflected in the Guaranteed
Interest Rate.
EXAMPLE OF COMPOUNDING AT THE GUARANTEED INTEREST RATE
<Table>
Beginning Account Value: $50,000
Guarantee Period: 5 years
Guaranteed Interest Rate: 5.50% Annual Effective Rate
</Table>
<Table>
<Caption>
END OF CONTRACT YEAR
------------------------
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
---------- ---------- ---------- ---------- ----------
Beginning Account Value $50,000.00
X (1 + Guaranteed Interest Rate) 1.055
---------- ---------- ---------- ---------- ----------
$52,750.00
========== ========== ========== ========== ==========
Account Value at end of Contract Year 1 $52,750.00
X (I + Guaranteed Interest Rate) 1.055
---------- ---------- ---------- ---------- ----------
$55,651.25
========== ========== ========== ========== ==========
Account Value at end of Contract Year 2 $55,651.25
X (I + Guaranteed Interest Rate) 1.055
---------- ---------- ---------- ---------- ----------
$58,712.07
========== ========== ========== ========== ==========
Account Value at end of Contract Year 3 $58,712.07
X (1 + Guaranteed Interest Rate) 1.055
---------- ---------- ---------- ---------- ----------
$61,941.23
========== ========== ========== ========== ==========
Account Value at end of Contract Year 4 $61,941.23
X (1 + Guaranteed Interest Rate) 1.055
---------- ---------- ---------- ---------- ----------
$65,348.00
========== ========== ========== ========== ==========
Account Value at end of Guarantee Period (i.e.
Maturity Value) $65,348.00
========== ========== ========== ========== ==========
</Table>
Total Interest Credited in Guarantee Period -- $65,348.00 - 50,000.00 =
$15,348.00
Account Value at end of Guarantee Period -- $50,000.00 + 15,348.00 = $65,348.00
THE ABOVE EXAMPLE ASSUMES NO SURRENDERS, DEDUCTIONS FOR PREMIUM TAXES, OR PRE-
AUTHORIZED PAYMENT OF INTEREST DURING THE ENTIRE FIVE-YEAR PERIOD. A MARKET
VALUE ADJUSTMENT OR SURRENDER CHARGE MAY APPLY TO ANY SUCH INTERIM SURRENDER
(SEE "SURRENDERS"). THE HYPOTHETICAL GUARANTEED INTEREST RATES ARE ILLUSTRATIVE
ONLY AND ARE NOT INTENDED TO PREDICT FUTURE GUARANTEED INTEREST RATES TO BE
DECLARED UNDER THE CONTRACT. ACTUAL GUARANTEED INTEREST RATES DECLARED FOR ANY
GIVEN TIME MAY BE MORE OR LESS THAN THOSE SHOWN.
We will notify you about subsequent Guarantee Periods near the end of your
current Guarantee Period. At the end of a Guarantee Period:
- You may elect a subsequent Guarantee Period by telephone or in writing
- Your Account Value will be transferred to the new Guarantee Period at
the Guaranteed Interest Rate offered at that time
- If you do not make any election, we will automatically transfer the
Account Values into a one year Guarantee Period, which you may
transfer out of into a new Guarantee Period with no transfer,
surrender or Market Value Adjustment charge.
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ESTABLISHMENT OF GUARANTEED INTEREST RATES
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When you purchase your Contract, you will know the Guaranteed Interest Rate for
the Guarantee Period you choose. We will send you a confirmation showing the
amount of your Purchase Payment and the applicable Guaranteed Interest Rate.
After the end of each calendar year, we will send you a statement that will
show:
- your Account Value as of the end of the preceding year
- all transactions regarding your Contract during the year
- your Account Value at the end of the current year
- the Guaranteed Interest Rate being credited to your Contract.
The Company has no specific formula for determining Guaranteed Interest Rates in
the future. The Guaranteed Interest Rates will be declared from time to time as
market conditions dictate. (See "Investments by the Company.") In addition, the
Company may also consider various other factors in determining Guaranteed
Interest Rates for a given period, including regulatory and tax requirements,
sales commissions, administrative expenses, general economic trends and
competitive factors.
THE COMPANY WILL MAKE THE FINAL DETERMINATION AS TO GUARANTEED INTEREST RATES TO
BE DECLARED. WE CANNOT PREDICT NOR CAN WE GUARANTEE FUTURE GUARANTEED INTEREST
RATES.
SURRENDERS
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GENERAL
You may make a full or partial surrender at any time, subject to the surrender
charges described below. In the case of all surrenders, the Cash Value and
Maturity Value will be reduced.
Upon request, we will inform you of the amount payable upon a full or partial
surrender. Any full, partial or special surrender may be subject to tax. (See
"Federal Tax Considerations.")
We may defer payment of any surrender up to six months from the date we receive
your notice of surrender or the period permitted by state insurance law, if
less. If we defer payment for more than 30 days, we will pay interest of at
least 3.5% per annum on the amount deferred. In New York, if we defer payment
for more than 10 working days, we will continue to credit interest in the same
manner as it would have been credited had the surrender request not been
received until the day we make payment.
Participants in Section 403(b) tax-deferred annuity plans may not make
surrenders from certain amounts before the earliest of age 59 1/2, separation
from service, death, disability or hardship. (See "Federal Tax
Considerations -- Section 403(b) Plans and Arrangements.")
We may withhold payment of surrender proceeds if any portion of those proceeds
would be derived from a Contract Owner's check that has not yet cleared (i.e.,
that could still be dishonored by your banking institution). We may use
telephone, fax, internet or other means of communication to verify that payment
from the Contract Owner's check has been or will be collected. We will not delay
payment longer than necessary for us to verify that payment has been or will be
collected. Contract Owners may avoid the possibility of delay in the
disbursement of proceeds coming from a check that has not yet cleared by
providing us with a certified check.
SURRENDER CHARGE
There are no front-end sales charges. A surrender charge may be assessed on
surrenders made before the end of the seventh Contract Year. The surrender
charge is computed as a percentage of the Cash Value being surrendered.
8
<Table>
<Caption>
CONTRACT YEAR CHARGE AS A
IN WHICH SURRENDER PERCENTAGE OF
IS MADE CASH VALUE
- ------------------ -------------
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
Thereafter 0%
</Table>
SPECIAL SURRENDERS
No surrender charge or Market Value Adjustment will apply for full or partial
surrenders taken: (1) at the end of an Initial Guarantee Period of at least
three years in duration; or (2) at the end of any other Initial Guarantee Period
if the surrender occurs on or after the fifth Contract Year. However, Guarantee
Periods initiated through the Guaranteed Period Exchange Option will be subject
to the surrender charges based on the original Contract Date. (See "Guarantee
Period Exchange Option".)
We will not assess a surrender charge if your Account Value is applied to elect
an annuity option on the Annuity Commencement Date (except if the Fifth Option
is elected within the First Contract Year). A Market Value Adjustment will be
applied if the Annuity Commencement Date is not at the end of a Guarantee
Period. To elect an annuity option, you must notify us at least 30 days before
your Annuity Commencement Date.
In addition, for all full or partial surrenders, no surrender charge or Market
Value Adjustment will apply to any interest credited during the previous
Contract Year. Any such surrender may, however, be subject to federal or state
taxes.
If you participate in our Minimum Distribution Program, any payments that
satisfy the maximum requirements for the Minimum Distribution Program will not
be subject to the Market Value Adjustment or surrender charge. Systematic
withdrawals outside our Minimum Distribution Program are subject to a surrender
charge and a Market Value Adjustment to the extent that the payments exceed the
interest earned during the prior Contract Year.
Any payments may be subject to federal or state taxes.
TERMINATION OF THE CONTRACT
We reserve the right to terminate this Contract if the Account Value is less
than the termination amount shown in the Contract. In New York State only, we
reserve the right to terminate this Contract if the Account Value is less than
the termination amount shown in the Contract after the completion of three
Contract Years. Termination will not occur until 31 days after we have mailed
notice of termination to you at your last known address. For Contracts issued on
or after February 28, 2007, in New York State, if the Contract is terminated, we
will pay you the Account Value. In all other states, if the Contract is
terminated, we will pay the Cash Surrender Value.
MARKET VALUE ADJUSTMENT
The Market Value Adjustment may adjust up or down the amount payable on a full
or partial withdrawal before the end of any Guarantee Period.
The Market Value Adjustment is the relationship between the then-current
Guaranteed Interest Rate for a Guarantee Period equal to the time left in your
Guarantee Period, and the Guaranteed Interest Rate that applies to your
Contract.
Generally, if your Guaranteed Interest Rate is lower than the applicable current
Guaranteed Interest Rate, then the Market Value Adjustment will result in a
lower payment upon surrender. Conversely, if your Guaranteed Interest Rate
9
is higher than the applicable current Guaranteed Interest Rate, the Market Value
Adjustment will result in a higher payment upon surrender.
The Market Value Adjustment amount primarily depends on the level of interest
rates on the Company's investments when the current Guaranteed Interest Rates
are established. The Market Adjusted Value is sensitive, therefore, to changes
in current interest rates. It is possible that the amount you receive upon
surrender would be less than the original Purchase Payment if interest rates
increase. It is also possible that if interest rates decrease, the amount you
receive upon surrender may be more than the original Purchase Payment plus
accrued interest.
The Market Value Adjustment formula will not be applied:
a. when you submit a Written Request for a full or partial surrender at
the end of any Guarantee Period if we receive the request within the
30 day period prior to the end of such Guarantee Period:
b. to any interest credited during the previous Contract Year;
c. to a transfer to a Guarantee period of a different duration, during
the automatic renewal period; or
d. to payments that satisfy the maximum requirement for the minimum
distribution program, if you participate in our minimum distribution
program. Additionally, these payments through the minimum distribution
program will not be subject to a surrender charge.
We will send a notice to you at least 15 but not more than 45 days prior to the
beginning of the 30 day period in which you may request a full or partial
surrender without imposition of a Market Value Adjustment.
Appendix B shows the formula for calculating the Market Value Adjustment as well
as an additional illustration of the application of the Market Value Adjustment.
WAIVER OF SURRENDER CHARGE
The surrender charge will be waived if:
(a) distributions are applied to any one of the annuity options (except if
the Fifth Option is elected within the first Contract Year) or
(b) the Owner or Annuitant dies and payment of a death benefit is made to
the Beneficiary.
GUARANTEE PERIOD EXCHANGE OPTION
Once each Contract Year after the first year, you may elect to transfer from
your current Guarantee Period into a new Guarantee Period of a different
duration and at the then-current Guaranteed Interest Rate. A Market Value
Adjustment will be applied to your current Account Value at the time of
transfer. There will be no surrender charge for this exchange. However,
surrender charges will continue to be based on time elapsed from the original
Contract Date. We reserve the right to charge a fee of up to $50 for such
transfers, but do not impose a transfer charge as of the date of this
prospectus. In New York, we do not assess a transfer charge for such transfers.
PREMIUM TAXES
Certain state and local governments impose premium taxes. These taxes currently
range from 0% to 3.5%, depending upon the jurisdiction. The Company is
responsible for paying these taxes and will determine the method used to recover
premium tax expenses incurred. The Company will deduct any applicable premium
taxes from the Cash Value either upon death, surrender, annuitization, or at the
time the Purchase Payment is made to the Contract, but no earlier than when the
Company has a tax liability under state law.
RESTRICTIONS ON FINANCIAL TRANSACTIONS
Federal laws designed to counter terrorism and prevent money laundering might,
in certain circumstances, require us to block a Contract Owner's ability to make
certain transactions and thereby refuse to accept any request for
10
transfers, withdrawals, surrenders, or death benefits, until instructions are
received from the appropriate regulator. We may also be required to provide
additional information about you and your Contract to government regulators.
OWNERSHIP PROVISIONS
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TYPES OF OWNERSHIP
CONTRACT OWNER
The Contract belongs to the Contract Owner named in the Contact (on the Contract
Specifications page) or to any other person to whom you subsequently assign the
Contract. You have sole power during the Annuitant's lifetime to exercise any
rights and to receive all benefits given in the Contract provided you have not
named an irrevocable beneficiary and provided you have not assigned the
Contract.
You receive all payments while the Annuitant is alive unless you direct them to
an alternative recipient. An alternative recipient does not become the Contract
Owner. An alternative payment directive is revocable by you at any time by
giving us 30 days advance notice by Written Request.
JOINT OWNER
You may name joint owners (e.g., spouses) in a Written Request before the
Contract is in effect. All rights of ownership must be exercised by both owners.
Joint owners own equal shares of any benefits accruing or payments made to them.
All rights of a joint Contract Owner end at death if another joint Contract
Owner survives. The entire interest of the deceased joint Contract Owner in this
Contract will pass to the surviving joint Contract Owner, unless the deceased
joint Contract Owner was also the Annuitant.
If a joint Contract Owner dies before the payment of an annuity option begins
and is survived by the Annuitant, any surviving joint Contract Owner is the
"designated beneficiary" referred to in Section 72(s) of the Code, and his or
her rights pre-empt those of the beneficiary named in a Written Request. Upon
the death of a joint Contract Owner who is the Annuitant, the entire interest
will pass to the beneficiary or beneficiaries where applicable.
TRANSFER OF OWNERSHIP
You may transfer ownership by Written Request, subject to our approval. You may
not revoke any transfer of ownership after the effective date of such transfer.
The transfer of Contract Owner will take effect as of the date of your Written
Request, subject to any payments made or other actions taken by us before its
receipt.
BENEFICIARY
You name the beneficiary in a Written Request. The Beneficiary has the right to
receive any remaining Contract benefits upon the death of the Annuitant or under
certain circumstances, upon the death of the Contract Owner. If there is more
than one beneficiary surviving the Annuitant, the Beneficiaries will share
equally in benefits unless different shares are received by us by Written
Request prior to the death of the Annuitant.
Unless you have named an irrevocable Beneficiary you have the right to change
any Beneficiary by Written Request during the lifetime of the Annuitant and
while the Contract continues.
A change in Beneficiary will take effect as of the date of the Written Request,
subject to any payments made or other actions taken by us before we receive the
Written Request.
DEATH BENEFIT
- --------------------------------------------------------------------------------
The Death Benefit is the Account Value on the date we receive written
notification of due proof of death. No market value adjustment is made upon the
payment of a Death Benefit.
11
A qualified group Contract issued in connection with a qualified plan, except
for group 403(b) annuity, will not provide a death benefit because there are no
individual participant accounts.
PAYMENT OF PROCEEDS
The process of paying death benefit proceeds before the maturity date under
various situations for nonqualified contracts is summarized in the charts below.
The charts do not encompass every situation and are merely intended as a general
guide. More detailed information is provided in your Contract. Generally, the
person(s) receiving the benefit may request that the proceeds be paid in a lump
sum, or be applied to one of the settlement options available under the
Contract.
<Table>
<Caption>
- --------------------------------------------------------------------------------------------------------------
MANDATORY
BEFORE THE MATURITY DATE, THE COMPANY WILL PAYOUT RULES
UPON THE DEATH OF THE PAY THE PROCEEDS TO: UNLESS APPLY*
- --------------------------------------------------------------------------------------------------------------
OWNER (WHO IS NOT THE The Beneficiary (ies), or if Unless the Beneficiary is Yes
ANNUITANT) (WITH NO JOINT none, to the Contract the Contract Owner's spouse
OWNER) Owner's estate. and the spouse elects to
continue the contract as the
new owner rather than
receive the distribution.
- --------------------------------------------------------------------------------------------------------------
OWNER (WHO IS THE ANNUITANT) The Beneficiary (ies), or if Unless the Beneficiary is Yes
(WITH NO JOINT OWNER) none, to the Contract the Contract Owner's spouse
Owner's estate. and the spouse elects to
continue the contract as the
new owner rather than
receive the distribution.
- --------------------------------------------------------------------------------------------------------------
JOINT OWNER (WHO IS NOT THE The surviving joint owner. Unless the surviving joint Yes
ANNUITANT) owner is the spouse and
elects to continue the
Contract.
- --------------------------------------------------------------------------------------------------------------
JOINT OWNER (WHO IS THE The surviving joint owner. Unless the surviving joint Yes
ANNUITANT) owner is the Contract
Owner's spouse and the
spouse elects to continue
the Contract. Or, unless
there is a Contingent
Annuitant the Contingent
Annuitant becomes the
Annuitant and the proceeds
will be paid to the
surviving joint owner.
- --------------------------------------------------------------------------------------------------------------
</Table>
12
<Table>
<Caption>
- --------------------------------------------------------------------------------------------------------------
MANDATORY
BEFORE THE MATURITY DATE, THE COMPANY WILL PAYOUT RULES
UPON THE DEATH OF THE PAY THE PROCEEDS TO: UNLESS APPLY*
- --------------------------------------------------------------------------------------------------------------
ANNUITANT (WHO IS NOT THE The Beneficiary (ies), or if Unless, the Beneficiary is Yes
CONTRACT OWNER) none, to the Contract Owner. the Contract Owner's spouse
and the spouse elects to
continue the Contract as the
new owner rather than
receive the distribution.
Or, unless there is a
Contingent Annuitant. Then,
the Contingent Annuitant
becomes the Annuitant and
the Contract continues in
effect (generally using the
original Maturity Date). The
proceeds will then be paid
upon the death of the
Contingent Annuitant or
Owner.
- --------------------------------------------------------------------------------------------------------------
ANNUITANT (WHO IS THE See death of "owner who is Yes
CONTRACT OWNER) the Annuitant" above.
- --------------------------------------------------------------------------------------------------------------
ANNUITANT (WHERE OWNER IS A The Beneficiary (ies) (e.g. Yes (Death of
NONNATURAL PERSON/TRUST) the trust). Annuitant is
treated as death
of the owner in
these
circumstances.)
- --------------------------------------------------------------------------------------------------------------
CONTINGENT ANNUITANT No death proceeds are N/A
(ASSUMING ANNUITANT IS STILL payable; Contract continues.
ALIVE)
- --------------------------------------------------------------------------------------------------------------
BENEFICIARY No death proceeds are N/A
payable; Contract continues.
- --------------------------------------------------------------------------------------------------------------
CONTINGENT BENEFICIARY No death proceeds are N/A
payable; Contract continues.
- --------------------------------------------------------------------------------------------------------------
</Table>
- ---------
* Certain payout rules of the Internal Revenue Code (IRC) are triggered upon
the death of any Owner. Non-spousal Beneficiaries (as well as spousal
beneficiaries who choose not to assume the contract) must begin taking
distributions based on the Beneficiary's life expectancy within one year
of death or take a complete distribution of contract proceeds within 5
years of death.
DEATH PROCEEDS AFTER THE MATURITY DATE
If any Owner or the Annuitant dies on or after the maturity date, the Company
will pay the Beneficiary a death benefit consisting of any benefit remaining
under the annuity or income option then in effect.
ANNUITY PERIOD
- --------------------------------------------------------------------------------
ELECTION OF ANNUITY COMMENCEMENT DATE AND FORM OF ANNUITY
You can select an Annuity Commencement Date at the time you apply for a
Contract. In no instance shall the Annuity Commencement Date be later than ten
years after the Contract Date or, if we agree, a later date not to
13
exceed the Annuitant's 90th birthday, or in New York State, for Contracts issued
on or after February 28, 2007, the Annuitant's 95th birthday, subject to the
laws and regulations then in effect. Within 30 days before your Annuity
Commencement Date, you may elect to have all or a portion of your Cash Surrender
Value paid in a lump sum on your Annuity Commencement Date. Or, at least 30 days
before the Annuity Commencement Date, you may elect to have your Cash Value or a
portion thereof (less applicable premium taxes, if any) distributed under any of
the Annuity Options described below. If Option 5 "Payments for a Designated
Period" is elected in the first Contract Year, the Cash Surrender Value will be
applied (other than in New York, where you may not annuitize until you have held
the Contract for thirteen months).
If no option is elected for nonqualified Contracts, the Cash Value will be
applied on the Annuity Commencement Date under the Second Option to provide a
life annuity with 120 monthly payments certain. For qualified Contracts, the
Cash Value will be applied to Option 4, to provide a joint and last life
annuity. This Contract may not be surrendered once annuity payments begin,
except with respect to Option 6.
MISSTATEMENT
We may require proof of age of the Owner, Beneficiary or Annuitant before making
any payments under this Contract that are measured by the Owner's, Beneficiary's
or Annuitant's life. If the age of the measuring life has been misstated, the
amount payable will be the amount that would have been provided at the correct
age.
Once Annuity payments have begun, the amount of any overpayments or
underpayments will be deducted from or added to the payment or payments made
after the adjustment. In certain states, we are required to pay interest on any
underpayments.
CHANGE OF ANNUITY COMMENCEMENT DATE OR ANNUITY OPTION
You may change the Annuity Commencement Date at any time as long as such change
is made in writing and is received by Us at least 30 days before the scheduled
Annuity Commencement Date. Once an Annuity option has begun, it may not be
changed.
ANNUITY OPTIONS
Any one of the following Annuity Options may be elected. Annuity payments may be
available on a monthly, quarterly, semiannual or annual basis. The minimum
amount that may be applied to Annuity Options is $2,000 unless we consent to a
smaller amount.
Option 1 -- Life Annuity -- NO REFUND: The Company will make Annuity payments
during the lifetime of the Annuitant ending with the last payment before death.
This option offers the maximum periodic payment, since there is no assurance of
a minimum number of payments or provision for a death benefit for Beneficiaries.
Option 2 -- Life Annuity With 120, 180, or 240 Monthly Payments Assured: The
Company will make monthly Annuity payments during the lifetime of the Annuitant,
with the agreement that if, at the death of that person, payments have been made
for less than 120, 180, or 240 months as elected, We will continue making
payments to the Beneficiary during the remainder of the period.
Option 3 -- Cash Refund Life Annuity: The Company will make annuity payments
during the lifetime of the Annuitant. Upon the death of the Annuitant, the
Beneficiary will receive a payment equal to the Cash Value applied to this
option on the Annuity Commencement Date minus the dollar amount of annuity
payments already paid.
Option 4 -- Joint And Last Survivor Life Annuity -- NO REFUND: The Company will
make annuity payments during the joint lifetime of the Annuitant and a second
person. On the death of either person, We will continue making payments to the
survivor. No further payments will be made following the death of the survivor.
OPTION 5 -- Payments For A Designated Period: We will make periodic payments
guaranteed for the number of years selected which may be from five to thirty
years. Please note that Option 5 may not satisfy minimum required distribution
rules for Qualified Contracts. Consult a tax advisor before electing this
option.
OPTION 6 -- Annuity Proceeds Settlement Option: Proceeds from the Death Benefit
may be left with the Company for a period not to exceed five years from the date
of the Owner's or Annuitant's death prior to the Annuity
14
Commencement Date. The proceeds will remain in the same Guarantee Period and
continue to earn the same Guaranteed Interest Rate as at the time of death. If
the Guarantee Period ends before the end of the five-year period, the
Beneficiary may elect a new Guarantee Period with a duration not to exceed the
time remaining in the period of five years from the date of the Owner's or
Annuitant's death. Full or partial surrenders may be made at any time. In the
event of surrenders, the remaining Cash Value will equal the proceeds left with
the Company, minus any surrender charge and applicable premium tax, plus any
interest earned. A Market Value Adjustment will be applied to all surrenders
except those occurring at the end of a Guarantee Period.
OPTION 7 -- Other Annuity Options: We will make any other arrangements for
annuity payments as may be mutually agreed upon by you and us.
The tables in the Contract reflect guaranteed dollar amounts of monthly payments
for each $1,000 applied under the first five Annuity Options listed above. Under
Options 1, 2 or 3, the amount of each payment will depend upon the age (and, for
nonqualified Contracts, where not prohibited by state law, sex) of the Annuitant
at the time the first payment is due. Under Option 4, the amount of each payment
will depend upon the payees' ages at the time the first payment is due (and, for
nonqualified Contracts, where not prohibited by state law, the sex of both
payees). Annuity rates will not be less than those guaranteed in the Contract.
The tables for Options 1, 2, 3 and 4 are based on the 1983 Individual Annuitant
Mortality Table A with ages set back one year and a net investment rate of 3%
per annum. The table for Option 5 is based on a net investment rate of 3% per
annum. If mortality appears more favorable and interest rates so justify, at our
discretion, we may apply other tables which will result in higher payments for
each $1,000 applied under one or more of the first five Annuity Options. Annuity
rates will not be less than those guaranteed in the Contract.
ANNUITY PAYMENT
The first payment under any Annuity Option will be made on the first day of the
month following the Annuity Commencement Date. Subsequent payments will be made
in accordance with the manner of payment selected and are based on the first
payment date.
The option elected must result in a payment at least equal to the minimum
payment amount according to Company rules then in effect. If at any time
payments are less than the minimum payment amount, the Company has the right to
change the frequency to an interval resulting in a payment at least equal to the
minimum. If any amount due is less than the minimum per year, the Company may
make other arrangements that are equitable to the Annuitant.
Once annuity payments have begun, no surrender of the annuity benefit can be
made for the purpose of receiving a lump-sum settlement.
DEATH OF ANNUITANT AFTER THE ANNUITY COMMENCEMENT DATE
If the Annuitant dies after the Annuity Commencement Date, any amount payable as
a death benefit will be distributed at least as rapidly as under the method of
distribution in effect.
SEPARATE ACCOUNT
- --------------------------------------------------------------------------------
Purchase payments made to the Contract are invested in the Separate Account. We
have exclusive and absolute ownership and control of the assets of the Separate
Account. It is a non-unitized Separate Account and is not chargeable with
liabilities arising out of any other business that we may conduct. You do not
share in the investment performance of assets allocated to the Separate Account.
Income, gains and losses, whether or not realized from assets allocated to the
Separate Account shall be charged against the Separate Account without regard to
our other income, gains or losses. The obligations under the Contract are
independent of the investment performance of the Separate Account and are the
obligations of the Company.
We will maintain in the Separate Account assets with an aggregate market value
at least equal to the greatest of:
(i) an amount equal to the aggregate cash surrender values of the
Contracts funded by the Separate Account (as adjusted by the market-
value adjustment formula)
15
(ii) an amount equal to the reserves of the Contracts funded by the
Separate Account
(iii)an amount of assets deemed by the qualified actuary to be sufficient
to make good provision for the Contract liabilities.
If the aggregate market value of such assets should fall below such amount, the
Company will transfer assets into the Separate Account so that the market value
for the Separate Account's assets is at least equal to such amount.
INVESTMENTS BY THE COMPANY
- --------------------------------------------------------------------------------
We must invest our assets according to applicable state laws regarding the
nature, quality and diversification of investments that may be made by life
insurance companies. In general, these laws permit investments, within specified
limits and subject to certain qualifications, in federal, state and municipal
obligations, corporate bonds, preferred and common stocks, real estate
mortgages, real estate and certain other investments. Purchase Payments made to
Contracts issued by the MetLife Insurance Company of Connecticut are invested in
MetLife of CT Separate Account MGA or MetLife of CT Separate Account MGA II.
Both MetLife of CT Separate Account MGA and MetLife of CT Separate Account MGA
II are non-unitized separate accounts and are not chargeable with liabilities
arising out of any other business that the Company may conduct. Owners do not
share in the investment performance of assets allocated to the Separate
Accounts. The obligations under the Contract are independent of the investment
performance of the Separate Accounts and are the obligations of the Company.
In establishing Guaranteed Interest Rates, the Company will consider the yields
on fixed income securities that are part of the Company's current investment
strategy for the Contracts at the time that the Guaranteed Interest Rates are
established. (See "Establishment of Guaranteed Interest Rates".) The current
investment strategy for the Contracts is to invest in fixed income securities,
including public bonds, privately placed bonds, and mortgages, some of which may
be zero coupon securities. While this generally describes our investment
strategy, We are not obligated to follow any particular strategy except as may
be required by federal and state laws.
ANNUAL STATEMENT
- --------------------------------------------------------------------------------
At the end of each calendar year, You will receive a statement that will show:
- Your Account Value as of the end of the preceding year;
- all transactions regarding Your Contract during the year;
- Your Account Value at the end of the current year; and
- the interest credited to Your Contract.
AMENDMENT OF THE CONTRACTS
- --------------------------------------------------------------------------------
We reserve the right to amend the Contracts to comply with applicable federal or
state laws or regulations. We will notify You in writing of any such amendments.
ASSIGNMENT OF THE CONTRACTS
- --------------------------------------------------------------------------------
Our rights as evidenced by a Contract may be assigned as permitted by applicable
law with our consent. An assignment will not be binding upon us until we receive
notice from you in writing. We assume no responsibility for the validity or
effect of any assignment. You should consult your tax adviser regarding the tax
consequences of an assignment.
16
DISTRIBUTION OF THE CONTRACTS
- --------------------------------------------------------------------------------
DISTRIBUTION AND PRINCIPAL UNDERWRITING AGREEMENT. The Company has appointed
MetLife Investors Distribution Company ("MLIDC") to serve as the principal
underwriter and distributor of the securities offered through this prospectus,
pursuant to the terms of a Distribution and Principal Underwriting Agreement.
MLIDC, which is an affiliate of the Company, also acts as the principal
underwriter and distributor of other annuity contracts and variable annuity
contracts and variable life insurance policies issued by the Company and its
affiliated companies. The Company reimburses MLIDC for expenses MLIDC incurs in
distributing the Contracts (e.g. commissions payable to retail broker-dealers
who sell the Contracts). MLIDC does not retain any fees under the Contracts.
MLIDC's principal executive offices are located at 5 Park Plaza, Suite 1900,
Irvine, CA 92614.
MLIDC is registered as a broker-dealer with the Securities and Exchange
Commission ("SEC") under the Securities Exchange Act of 1934, as well as the
securities commissions in the states in which it operates, and is a member of
the Financial Industry Regulatory Authority ("FINRA"). An investor brochure that
includes information describing FINRA's Public Disclosure Program is available
by calling FINRA's Public Disclosure Program hotline at 1-800-289-999 or by
visiting FINRA's website at www.finra.org.
MLIDC and the Company have entered a selling agreement with Fidelity who is
registered with the SEC and a member of FINRA. Applications for the Contract are
solicited by registered representatives who are associated persons of Fidelity.
Such representatives act as appointed agents of the Company under applicable
state insurance law and must be licensed to sell variable insurance products.
The Company intends to offer the Contract in all jurisdictions where it is
licensed to do business and where the Contract is approved. The Contracts are
offered on a continuous basis.
COMPENSATION. Fidelity is paid compensation for the promotion and sale of the
Contracts. Registered representatives who solicit sales of the Contract
typically receive a portion of the compensation payable to the broker-dealer
firm. The amount the registered representative receives depends on the agreement
between the firm and the registered representative. This agreement may also
provide for the payment of other types of cash and non-cash compensation and
other benefits. A broker-dealer firm or registered representative of a firm may
receive different compensation for selling one product over another and/or may
be inclined to favor one product provider over another product provider due to
differing compensation rates.
We generally pay compensation as a percentage of purchase payments invested in
the Contract. Alternatively, we may pay lower compensation on purchase payments
but pay periodic asset-based compensation based on all or a portion of the Cash
Value. The amount and timing of compensation may vary depending on the selling
agreement but is not expected to exceed 6.00% of Purchase Payments (if up-front
compensation is paid to registered representatives) and up to 1.50% annually of
average Cash Value (if asset-based compensation is paid to registered
representatives).
FEDERAL TAX CONSIDERATIONS
- --------------------------------------------------------------------------------
GENERAL
THIS SECTION PROVIDES GENERAL INFORMATION REGARDING THE FEDERAL TAXATION OF
ANNUITY CONTRACTS IN VARIOUS TAX "MARKETS", INCLUDING GENERAL INFORMATION
REGARDING OPTIONAL ANNUITY CONTRACT BENEFITS SUCH AS LIVING BENEFITS RIDERS.
THIS SECTION INCLUDES A DISCUSSION OF TAX MARKETS AND OPTIONAL BENEFITS THAT MAY
NOT BE OFFERED BY THIS PROSPECTUS. CONSULT YOUR CONTRACT OR CERTIFICATE FOR MORE
INFORMATION.
The Company is taxed as a life insurance company under Subchapter L of the Code.
Generally, amounts credited to a contract are not taxable until received by the
Contract Owner, participant or Beneficiary, either in the form of annuity
payments or other distributions. Tax consequences and limits are described
further below for each annuity program. The following general discussion of the
federal income tax consequences related to your investment in this Contract is
not intended to cover all situations, and is not meant to provide legal or tax
advice. Because of the complexity of the law and the fact that the tax results
will vary depending upon many factors, you should consult with your tax and/or
legal advisor regarding the tax implications of purchasing this Contract based
upon your individual situation.
17
You are responsible for determining whether your purchase of a Contract,
withdrawals, Annuity Payments and any other transactions under your Contract
satisfy applicable tax law.
Congress has recognized the value of saving for retirement by providing certain
tax benefits for annuities. The Internal Revenue Code ("Code") governs how
earnings on your investment in the Contract are ultimately taxed, depending upon
the type of Contract, Qualified or Non-qualified, and the manner in which the
money is distributed, as briefly described below. In analyzing the benefits of
tax deferral it is important to note that the Jobs and Growth Tax Relief
Reconciliation Act of 2003 reduced the marginal tax rates on long-term capital
gains and dividends to 5% and 15% respectively. The reduced rates apply during
2003 through 2008, and thereafter will increase to prior levels. Earnings under
annuity Contracts, like interest payable as fixed investments (notes, bonds,
etc.), continue to be taxed as ordinary income (current top rate of 35%).
Under current Federal income tax law, the taxable portion of distribution under
variable annuity contracts and qualified plans (including IRAs) is not eligible
for the reduced tax rate applicable to long-term capital gains and dividends.
We are not responsible for determining if your employer's plan or arrangement
satisfies the requirements of the Code and/or the Employee Retirement Income
Security Act of 1974 (ERISA). If the Annuity is subject to the Retirement Equity
Act because it is part of a plan subject to ERISA, the participant's spouse has
certain rights which may be waived with the written consent of the spouse.
Consult your tax advisor.
The rules for state and local income taxes may differ from the Federal income
tax rules. Contract Owners and certificate owners should consult their own tax
advisors and the law of the applicable taxing jurisdiction to determine what
rules and tax benefits apply to the contract.
Tax-Free Exchanges. Code Section 1035 provides that, if certain conditions are
met, no gain or loss is recognized when an annuity contract is received in
exchange for a life, endowment, or annuity contract. Since different annuity
contracts have different expenses, fees and benefits, a tax-free exchange could
result in your investment becoming subject to higher or lower fees and/or
expenses.
Federal Estate Taxes. While no attempt is being made to discuss the Federal
estate tax implications of the Contract, you should keep in mind that the value
of an annuity contract owned by a decedent and payable to a beneficiary by
virtue of surviving the decedent is included in the decedent's gross estate.
Depending on the terms of the annuity contract, the value of the annuity
included in the gross estate may be the value of the lump sum payment payable to
the designated beneficiary or the actuarial value of the payments to be received
by the beneficiary. Consult an estate planning advisor for more information.
Generation-Skipping transfer tax. Under certain circumstances, the Code may
impose a "generation skipping transfer tax" when all or part of an annuity
contract is transferred to, or a death benefit is paid to, an individual two or
more generations younger than the Contract owner. Regulations issued under the
Code may require us to deduct the tax from your Contract, or from any applicable
payment, and pay it directly to the IRS. Consult a tax advisor or attorney prior
to naming a beneficiary or other payee under the Income Annuity to determine
whether this tax may apply.
The Company may be entitled to certain tax benefits related to the assets of the
Separate Account. These tax benefits, which may include foreign tax credits and
corporate dividend received deductions, are not passed back to the Separate
Account or to contract owners since the Company is the owner of the assets from
which the tax benefits are derived.
PENALTY TAX FOR PREMATURE DISTRIBUTIONS
Taxable distributions taken before the Contract Owner has reached the age of 59
1/2 will be subject to a 10% additional tax penalty unless the distribution is
taken in a series of periodic distributions for life or life expectancy, or
unless the distribution follows the death or disability of the Contract Owner.
Other exceptions may be available in certain qualified plans. The 10% additional
tax due is in addition to any penalties that may apply under your Contract and
the normal income taxes due on the distribution.
In general this penalty tax does not apply to Section 457(b) annuities. However,
it does apply to distributions from Contracts under Section 457(b) plans of
employers which are state or local governments to the extent that the
distribution is attributable to rollovers accepted from other types of eligible
retirement plans.
18
NON-QUALIFIED ANNUITIES
If you purchase the Contract on an individual basis with after-tax dollars and
not under a tax qualified retirement plan or Individual Retirement Account, your
Contract is referred to as non-qualified.
As the owner of a non-qualified annuity, you do not receive any tax benefit
(deduction or deferral of income) on Purchase Payments, but you will not be
taxed on increases in the value of your Contract until a distribution
occurs -- either as a withdrawal (distribution made prior to the Maturity Date),
or as periodic Annuity Payments. When a withdrawal is made, you are taxed on the
amount of the withdrawal that is considered earnings under federal tax laws.
Similarly, when you receive an Annuity Payment, part of each periodic payment is
considered a return of your Purchase Payments and will not be taxed. The
remaining portion of the Annuity Payment (i.e., any earnings) will be considered
ordinary income for federal income tax purposes.
If a non-qualified annuity is owned by other than an individual (e.g. by a
corporation), however, increases in the value of the Contract attributable to
Purchase Payments made after February 28, 1986 are includable in income annually
and taxed at ordinary income tax rates. Furthermore, for contracts issued after
April 22, 1987, if you transfer the Contract to another person or entity without
adequate consideration, all deferred increases in value will be includable in
your income for federal income tax purposes at the time of the transfer.
The tax law treats all non-qualified deferred annuities issued after October 21,
1988 by the same company (or its affiliates) to the same owner during any one
calendar year as one annuity. This may cause a greater portion of your
withdrawals from the Deferred Annuity to be treated as income than would
otherwise be the case. Although the law is not clear, the aggregation rule may
also adversely affect the tax treatment of payments received under an income
annuity where the owner has purchased more than one non-qualified annuity during
the same calendar year from the same or an affiliated company after October 21,
1988, and is not receiving income payments from all annuities at the same time.
Under Section 1035 of the Code, your Non-Qualified Contract may be exchanged for
another Non-Qualified annuity without paying income taxes if certain Code
requirements are met and annuity payments have not yet commenced. Code Section
1035 provides that no gain or loss is recognized when an annuity contract or a
portion of an existing annuity account balance is received in exchange for a
life, endowment, or annuity Contract. Since different annuity contracts have
different expenses, fees and benefits, a tax-free exchange (or a portion
thereof) could result in your investment becoming subject to higher or lower
fees and/or expenses.
For partial exchanges under Section 1035, it is conceivable that the IRS could
require aggregation of the several contracts if distributions have been taken
from any of the contracts after the exchange within a certain period of time
(e.g. 24 months) resulting in greater taxable income and adverse tax
consequences such as imposition of the 10% penalty if the taxpayer has not
attained age 59 1/2 at the time of the distribution(s).
Additionally, consolidation of contracts under a Section 1035 exchange will
cause an aggregation of contract values and may adversely impact gain reported
and possible imposition of the 10% penalty if the taxpayer is under age 59 1/2
at the time of distribution from a consolidated contract.
Where otherwise permitted under the Contract, pledges, direct or indirect
borrowing against the value of the Contract and other types of transfers of all
or a portion of your Cash Value may result in the immediate taxation of the gain
in your Contract. This rule may not apply to certain transfers between spouses
or between ex-spouses which are considered incident to divorce as defined by the
Code.
Consult your tax advisor prior to changing the annuitant or prior to changing
the date you have determined to commence income payments, if permitted under the
terms of your Contract. It is conceivable that the IRS could consider such
actions to be a taxable exchange of annuity contracts.
OWNERSHIP OF THE INVESTMENTS
In certain circumstances, owners of annuity contracts have been considered to be
the owners of the underlying investments for Federal income tax purposes due to
their ability to exercise investment control over those assets. When this is the
case, the Contract Owners have been currently taxed on income and gains
attributable to the underlying investments. While we believe that the Contract
does not give the Contract Owner investment control
19
over the underlying investments, we reserve the right to modify the Contract as
necessary to prevent a Contract Owner from being treated as the owner of the
underlying investments supporting the Contract.
PARTIAL AND FULL WITHDRAWALS
Any withdrawal is generally treated as coming first from earnings (determined
based on the difference between the account balance prior to any surrender
charges and the remaining basis, immediately prior to the withdrawal) and only
after all earnings are paid out from your contributions (and thus a nontaxable
return of principal). However, this rule does not apply to payments made under
income annuities. Such payments are subject to an "exclusion ratio" or
"excludable amount" which determines how much of each payment is a non-taxable
return of your contribution/purchase payment and how much is a taxable payment
of earnings. Once the total amount treated as a return of your
contribution/purchase payment equals the amount of such contribution/purchase
payment, all remaining payments are fully taxable.
Generally, when you (or your beneficiary in the case of a death benefit) make a
partial withdrawal from your Non-Qualified Annuity, the Code treats such a
withdrawal as:
- First coming from earnings (and thus subject to income tax); and
- Then from your purchase payment (which is not subject to income tax).
This rule does not apply to payments made pursuant to an annuity pay-out option
under your Contract.
In the case of a full withdrawal, the withdrawn amounts are treated as first
coming from your non-taxable return of purchase payment and then from a taxable
payment of earnings. In the event the proceeds on full surrender of your
Contract are less than the remaining purchase payment you may be able to claim a
loss: consult a tax advisor as to whether a loss is allowable, the character of
such loss and where to claim it in your Federal Income Tax return.
ANNUITY PAYMENTS
Generally, different tax rules apply to payments made pursuant to a pay-out
option under your Contract than to withdrawals and payments received before the
annuity starting date.
Annuity payments are subject to an "excludable amount" or "exclusion ratio"
which determines how much of each payment is treated as:
- A non-taxable return of your purchase payment; and
- A taxable payment of earnings.
Partial Annuitizations: At the present time the IRS has not approved the use of
an exclusion ratio or exclusion amount when only part of your account balance is
converted to annuity payments. Currently, we will treat the application of less
than your entire Cash Value under a non-qualified Contract to a payment option
(i.e. taking Annuity Payments) as a taxable withdrawal for federal income tax
purposes (which may also be subject to the 10% penalty tax if you are under age
59 1/2). We will then treat the amount of the withdrawal (after any deductions
for taxes) as the purchase price of an income annuity and tax report the annuity
payments received for that annuity under the rules for variable income
annuities. CONSULT YOUR TAX ATTORNEY PRIOR TO PARTIALLY ANNUITIZING YOUR
CONTRACT.
Annuity payments and amounts received on the exercise of a full withdrawal or
partial withdrawal option under your non-qualified Contract may not be
transferred in a tax-free exchange into another annuity contract. In accordance
with our procedures, such amounts will instead be taxable under the rules for
annuity payments or withdrawals, whichever is applicable.
Additionally, if you are under age 59 1/2 at the time annuity payments commence
and intend the annuity payments to constitute an exception to the 10% penalty
tax, any attempt to make a tax-free transfer or rollover (whether for non-
qualified or qualified annuities) prior to the later of (a) age 59 1/2, or (b)
five years after annuity payments commence will generally invalidate the
exception and subject you to income tax, additional penalties and interest.
20
Generally, once the total amount treated as a non-taxable return of your
purchase payment equals your purchase payment, then all remaining payments are
fully taxable. We will withhold a portion of the taxable amount of your annuity
payment for income taxes, unless you elect otherwise. The amount we withhold is
determined by the Code.
Under the Code, withdrawals or annuity payments from non-qualified annuities
need not be made by a particular age. However, it is possible that the IRS may
determine that you must take a lump sum withdrawal or elect to receive annuity
payments by a certain age (e.g., 85).
AFTER DEATH & DEATH BENEFITS: NON-QUALIFIED ANNUITIES
TAXATION OF DEATH BENEFIT PROCEEDS
The death benefit under an annuity is generally taxable to the recipient
beneficiary or other payee, such as your estate, in the same manner as
distributions made to the contract owner (using the rules for withdrawals or
income payments, whichever is applicable).
If you die before the annuity starting date, as defined under Treasury
Regulations, we must make payment of your entire interest in the Contract within
five years of the date of your death or begin payments for a period and in a
manner allowed by the Code (and any regulations thereunder) to your beneficiary
within one year of the date of your death. If your spouse is your beneficiary,
he or she may elect to continue as "contract owner" of the Contract.
If the Contract is issued in your name after your death for the benefit of your
designated beneficiary with a purchase payment which is directly transferred to
the Contract from another non-qualified account or non-qualified annuity you
owned, the entire interest in the Contract including the value of all benefits
in addition to the account balance must be distributed to your designated
beneficiary under the required minimum distribution rules under the Code that
apply after your death. Additionally, the death benefit must continue to be
distributed to your beneficiary's beneficiary in a manner at least as rapidly as
the method of distribution in effect at the time of your beneficiary's death.
After your death, if your designated beneficiary does not timely elect in
accordance with our procedures a method for the payment of the death benefit
complying with the Code, the remaining interest in the Contract must be
distributed within five years of the date of your death.
Code Section 72(s) requires that non-qualified annuity contracts meet minimum
mandatory distribution requirements upon the death of any Contract Owner,
including the death of either of the joint owners. If these requirements are not
met, the Contract will not be treated as an annuity contract for federal income
tax purposes and earnings under the Contract will be taxable currently, not when
distributed. The distribution required depends, among other things, upon whether
an annuity option is elected or whether the succeeding Contract Owner is the
surviving spouse. We will administer contracts in accordance with these rules
and we will notify your beneficiary when he or she should begin receiving
payments.
If you die on or after the "annuity starting date", as defined under Treasury
Regulations, payments must continue to be made at least as rapidly as under the
income type being used as of the date of your death.
If you die before all purchase payments are returned, the unreturned amount may
be deductible on your final income tax return or deductible by either your
beneficiary, if income payments continue after your death, or by your estate or
your beneficiary if paid in a lump sum.
In the case of joint owners, the above rules will be applied on the death of any
contract owner.
Where the contract owner is not a natural person, these rules will be applied on
the death of or change of any annuitant (if changes to the annuitant are
permitted under the Contract).
QUALIFIED ANNUITY CONTRACTS
If you purchase your Contract with proceeds of an eligible rollover distribution
from any qualified employee pension plan or individual retirement account, or
deductible IRA contributions, your Contract is referred to as a Qualified
Contract. Some examples of Qualified Contracts are: IRAs, tax-sheltered
annuities established by public school systems or certain tax-exempt
organizations under Code Section 403(b), corporate sponsored pension and profit-
21
sharing plans (including 401(k) plans), Keogh Plans (for self-employed
individuals), and certain other qualified deferred compensation plans. Another
type of Qualified Contract is a Roth IRA, under which after-tax contributions
accumulate until maturity, when amounts (including earnings) may be withdrawn
tax-free. The rights and benefits under a Qualified Contract may be limited by
the terms of the retirement plan, regardless of the terms and conditions of the
Contract. Plan participants making contributions to Qualified Contracts will be
subject to the required minimum distribution rules as provided by the Code and
described below.
All IRAs, TSAs (ERISA and non-ERISA) sec.457(b), sec.403(a), SEP and SIMPLE
plans and 401(a) and 401(k) plans (hereinafter "Qualified Plans" unless
otherwise specified) receive tax deferral under the Code. Although there are no
additional tax benefits by funding your Qualified Plan with an annuity, doing so
does offer you additional insurance benefits such as the availability of a
guaranteed income for life.
TAXATION OF QUALIFIED ANNUITY CONTRACTS
Under a qualified annuity, since amounts paid into the Contract have generally
not yet been taxed, the full amount of such distributions, including the amount
attributable to the Purchase Payment, whether paid in the form of lump-sum
withdrawals or Annuity Payments, are generally taxed at the ordinary income tax
rate unless the distribution is transferred to an eligible rollover account or
contract. The Contract is available as a vehicle for IRA rollovers and for other
Qualified Contracts.
There are special rules which govern the taxation of Qualified Contracts,
including withdrawal restrictions, requirements for mandatory distributions, and
contribution limits. Amounts rolled over to the Contract from other qualified
plan funding vehicles are generally not subject to current taxation.
MANDATORY DISTRIBUTIONS FOR QUALIFIED PLANS
Federal tax law requires that minimum annual distributions begin by April 1st of
the calendar year following the calendar year in which an IRA owner attains age
70 1/2. Participants in qualified 457(b) plans, and 403(b) annuities may defer
minimum distributions until the later of April 1st of the calendar year
following the calendar year in which they attain age 70 1/2 or the year of
retirement (except for 5% or more owners). If you own more than one individual
retirement annuity and/or account, you may satisfy the minimum distribution
rules on an aggregate basis (i.e. determine the total amount of required
distributions from all IRAs and take the required amount from any one or more
IRAs). A similar aggregate approach is available to meet your 403(b) minimum
distribution requirements if you have multiple 403(b) annuities. Recently
promulgated Treasury regulations changed the distribution requirements;
therefore, it is important that you consult your tax adviser as to the impact of
these regulations on your personal situation.
Final income tax regulations regarding minimum distribution requirements were
released in June 2004. These regulations affect both deferred and income
annuities. Under these new rules, effective with respect to minimum
distributions required for the 2006 distribution year, in general, the value of
all benefits under a deferred annuity (including death benefits in excess of
cash value) must be added to the Contract Value in computing the amount required
to be distributed over the applicable period. We will provide You with
additional information as to the amount of your interest in the Contract that is
subject to required minimum distributions under this new rule and either compute
the required amount for you or offer to do so at your request. The new rules are
not entirely clear and you should consult your own tax advisors as to how these
rules affect your own Contract.
MINIMUM DISTRIBUTIONS FOR BENEFICIARIES UPON THE CONTRACT OWNER'S DEATH:
Upon the death of the Contract Owner and/or Annuitant of a Qualified Contract,
the funds remaining in the Contract must be completely withdrawn within 5 years
from the date of death (including in a single lump sum) or minimum distributions
may be taken over the life expectancy of the individual beneficiaries (and in
certain situations, trusts for individuals), provided such distributions are
payable at least annually and begin within one year from the date of death.
Special rules apply in the case of an IRA where the beneficiary is the surviving
spouse, which allow the spouse to assume the Contract as owner. Alternative
rules permit a spousal beneficiary under a qualified contract, including an IRA,
to defer the minimum distribution requirements until the end of the year in
which the deceased owner would have attained age 70 1/2, or to rollover the
death proceeds to his or her own IRA or to another eligible retirement plan in
which he or she participates.
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NOTE TO PARTICIPANTS IN QUALIFIED PLANS INCLUDING 401, 403 (B), 457 AS WELL AS
IRA OWNERS: While annual plan contribution limits may be increased from time to
time by Congress and the IRS for federal income tax purposes, these limits must
be adopted by each state for the higher limits to be effective at a state income
tax level. In other words, the permissible contribution limit for income tax
purposes may be different at the federal level from your state's income tax
laws. Please consult your employer or tax adviser regarding this issue.
INDIVIDUAL RETIREMENT ANNUITIES
The Contract has not been submitted to the IRS for approval as to form as a
valid IRA. Such approval would not constitute an IRS approval or endorsement of
any funding options under the contract. IRS approval as to form is not required
to constitute a valid IRA. Disqualification of the Contract as an IRA could
result in the immediate taxation of amounts held in the Contract and other
adverse tax consequences.
To the extent of earned income for the year and not exceeding the applicable
limit for the taxable year, an individual may make deductible contributions to
an individual retirement annuity. The applicable limit is $5,000 in 2008, and
may be indexed for inflation in future years. Additional "catch-up
contributions" may be made to an IRA by individuals age 50 or over. There are
certain limits on the deductible amount based on the adjusted gross income of
the individual and spouse and on their participation in a retirement plan. If an
individual is married and the spouse is not employed, the individual may
establish IRAs for the individual and spouse. The single purchase payment may
include the deductible contribution for the year of purchase.
Deductible contributions to an IRA and Roth IRA must be aggregated for purposes
of the individual Code Section 408A limits and the Code Section 219 limits (age
50+catch-up).
Partial or full distributions are treated as ordinary income, except that
amounts contributed after 1986 on a non-deductible basis are not includable in
income when distributed. An additional tax of 10% will apply to any taxable
distribution from the IRA that is received by the participant before the age of
59 1/2 except by reason of death, disability or as part of a series of payments
for life or life expectancy. Distributions must commence by April 1st of the
calendar year after the close of the calendar year in which the individual
attains the age of 70 1/2. Certain other mandatory distribution rules apply on
the death of the individual. The individual must maintain personal and tax
return records of any non-deductible contributions and distributions.
Section 408 (k) of the Code provides for the purchase of a Simplified Employee
Pension (SEP) plan. A SEP is funded through an IRA and can accept an annual
employer contribution limited to the lesser of $46,000 or 100% of pay for each
participant in 2008.
ROTH IRAS
Section 408A of the Code permits certain individuals to contribute to a Roth
IRA. Eligibility to make contributions is based upon income, and the applicable
limits vary based on marital status and/or whether the contribution is a
rollover contribution from another IRA or an annual contribution. Contributions
to a Roth IRA, which are subject to certain limitations, (similar to the annual
limits for traditional IRAs), are not deductible and must be made in cash or as
a rollover or transfer from another Roth IRA or other IRA. A conversion of
"traditional" IRA to a Roth IRA may be subject to tax and other special rules
apply. You should consult a tax adviser before combining any converted amounts
with other Roth IRA contributions, including any other conversion amounts from
other tax years.
Qualified distributions from a Roth IRA are tax-free. A qualified distribution
requires that the Roth IRA has been held for at least 5 years, and the
distribution is made after age 59 1/2, on death or disability of the owner, or
for a limited amount ($10,000) for a qualified first time home purchase for the
owner or certain relatives. Income tax and a 10% penalty tax may apply to
distributions made (1) before age 59 1/2 (subject to certain exceptions) or (2)
during five taxable years starting with the year in which the first contribution
is made to the Roth IRA.
CONVERSION
You may convert/rollover an existing IRA to a Roth IRA if your modified adjusted
gross income does not exceed $100,000 in the year you convert. If you are
married but file separately, you may not convert a Traditional IRA into a Roth
IRA.
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Except to the extent you have non-deductible IRA contributions, the amount
converted from an existing IRA into a Roth IRA is taxable. Generally, the 10%
early withdrawal penalty does not apply to conversions/rollovers. (See
discussion below).
Unless you elect otherwise, amounts you convert from a Traditional IRA to a Roth
IRA will be subject to income tax withholding. The amount withheld is determined
by the Code.
Note: new IRS guidance requires that in the case of a redesignation of a
Traditional IRA into a Roth IRA under the same Contract, the amount that is
treated as a taxable distribution is the entire value of the contract, in
addition to the account balance. The method(s) under which this value must be
determined has not been finalized by the IRS. However, interim guidance has been
issued which provides the Issuer may use a method similar to that used in
determining the required minimum distribution (but without certain exceptions
and assumptions being permitted). Additionally, issuers are required to increase
the value subject to tax in the year of the redesignation by any front loads or
non-recurring charges (this could include contractual withdrawal charges)
imposed in the 12 months prior to the conversion. If your Contract permits such
redesignation, consult your tax advisor prior to redesignating your Traditional
IRA to a Roth.
If you mistakenly convert or otherwise wish to change your Roth IRA contribution
to a Traditional IRA contribution, the tax law allows you to reverse your
conversion provided you do so before you file your tax return for the year of
the contribution and if certain conditions are met.
In general, a taxpayer may be permitted to revoke or recharacterize a previous
conversion from a Traditional IRA to a Roth IRA provided that certain conditions
are met. Consult your tax advisor and the instructions to IRS Form 8606 which
indicates how and when the recharacterization must be made to be valid and how
amounts should be reported. The income tax regulations also impose a waiting
period to make a reconversion after such a reversal or recharacterization.
KEOGH
A Keogh plan is generally a qualified retirement plan (defined contribution or
defined benefit) that covers a self-employed person. Other employees may also be
covered. Special rules apply to contribution limits in the case of a self-
employed person. The tax rules work similarly to the withdrawal, distribution
and eligible distribution rules as under IRAs. However, there may be some
differences: consult your tax advisor.
SECTION 403(B) PLANS AND ARRANGEMENTS
GENERAL
TSAs fall under Section 403(b) of the Code, which provides certain tax benefits
to eligible employees of public school systems and organizations that are tax
exempt under Section 501(c)(3) of the Code.
In general contributions to Section 403(b) arrangements are subject to
limitations under Section 415(c) of the Code (the lesser of 100% of includable
compensation or the applicable limit for the year).
Note: Income tax regulations issued in July 2007 will require certain
fundamental changes to these arrangements including (a) a requirement that there
be a written plan document in addition to the annuity contract or Section
403(b)(7) custodial account, (b) significant restrictions on the ability for
participants to direct proceeds between 403(b) annuity contracts and (c)
additional restrictions on withdrawals of amounts attributable to contributions
other than elective deferrals.
The regulations are generally effective for taxable years beginning after
December 31, 2008. However, certain aspects including a prohibition on the use
of new life insurance contracts under 403(b) arrangements and rules affecting
payroll taxes on certain types of contributions are currently effective.
WITHDRAWALS AND INCOME PAYMENTS
If you are under 59 1/2, you cannot withdraw money from your TSA Contract unless
the withdrawal:
- Relates to purchase payments made prior to 1989 (and pre-1989 earnings
on those purchase payments).
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- Is directly transferred to another permissible investment under
Section 403(b) arrangements;
- Relates to amounts that are not salary reduction elective deferrals;
- Occurs after you die, leave your job or become disabled (as defined by
the Code); or
- Is for financial hardship (but only to the extent of purchase
payments) if your plan allows it.
Purchase Payments for a tax-deferred annuity contract (including salary
reduction contributions) may be made by an employer for employees under annuity
plans adopted by public educational organizations and certain organizations
which are tax exempt under Section 501 (c) (3) of the Code. Within statutory
limits ($15,500 in 2008), such salary reduction contributions are not currently
includable in the gross income of the participants. Additional "catch-up
contributions" may be made by individuals age 50 or over. Increases in the value
of the Contract attributable to these Purchase Payments are similarly not
subject to current taxation. Instead, both the contributions to the tax-
sheltered annuity and the income in the Contract are taxable as ordinary income
when distributed.
An additional tax of 10% will apply to any taxable distribution received by the
participant before the age of 59 1/2, except when due to death, disability, or
as part of a series of payments for life or life expectancy, or made after the
age of 55 with separation from service. There are other statutory exceptions
that may apply in certain situations.
Amounts attributable to salary reductions made to a tax-sheltered annuity and
income thereon may not be withdrawn prior to attaining the age of 59 1/2,
severance from employment, death, total and permanent disability, or in the case
of hardship as defined by federal tax law and regulations. Hardship withdrawals
are available only to the extent of the salary reduction contributions and not
from the income attributable to such contributions. These restrictions do not
apply to assets held generally as of December 31, 1988.
Distributions must begin by April 1st of the calendar year following the later
of the calendar year in which the participant attains the age of 70 1/2 or the
calendar year in which the Participant retires. Certain other mandatory
distribution rules apply at the death of the participant.
Certain distributions, including most partial or full redemptions or "term-for-
years" distributions of less than 10 years, are eligible for direct rollover to
another 403 (b) contract, certain qualified plans or to an individual retirement
account without federal income tax or withholding.
To the extent an eligible rollover distribution is not directly rolled over to
another 403 (b) contract, an IRA or eligible qualified contract, 20% of the
taxable amount must be withheld. In addition, current tax may be avoided on
eligible rollover distributions which were not directly transferred to a
qualified retirement program if the participant makes a rollover to a qualified
retirement plan or IRA within 60 days of the distribution.
Distributions in the form of annuity payments are taxable to the participant or
Beneficiary as ordinary income in the year of receipt, except that any
distribution that is considered the participant's "investment in the Contract"
is treated as a return of capital and is not taxable.
SECTION 403(B) LOANS
Some 403(b) Contract loans will be made only from a Fixed Account balance up to
certain limits. In that case, we credit your Fixed Account If your TSA Contract
permits loans, such loans will be made only from any Fixed Interest account
balance and only up to certain limits. In that case, we credit the Fixed
Interest account balance up to the amount of the outstanding loan balance with a
rate of interest that is less than the interest rate we charge for the loan.
The Code and applicable income tax regulations limit the amount that may be
borrowed from your 403(b) annuity and all employer plans in the aggregate and
also require that loans be repaid, at a minimum, in scheduled level payments
over a certain term.
Your Contract will indicate whether contract loans are permitted. The terms of
the loan are governed by the Contract and loan agreement. Failure to satisfy
loan limits under the Code or to make any scheduled payments according to the
terms of your loan agreement and Federal tax law could have adverse tax
consequences. Consult a tax advisor and read your loan agreement and Contract
prior to taking any loan.
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DESIGNATED ROTH ACCOUNTS FOR 403(B) & 401(K) PLANS
Effective January 1, 2006, employers that have established and maintain TSA or
401(k) plans (collectively the "Plan") may also establish a Qualified Roth
Contribution Program under Section 402A of the Code ("Designated Roth Accounts")
to accept after tax contributions as part of the TSA or 401(k) plan. In
accordance with our administrative procedures, we may permit these contributions
to be made as purchase payments to a Section 403(b) Contract or to a Contract
issued under a 401(k) program under the following conditions:
1. The employer maintaining the plan has demonstrated to our satisfaction
that Designated Roth Accounts are permitted under the Plan.
2. In accordance with our administrative procedures, the amount of
elective deferrals has been irrevocably designated as an after-tax
contribution to the Designated Roth Account.
3. All state regulatory approvals have been obtained to permit the
Contract to accept such after-tax elective deferral contributions
(and, where permitted under the Qualified Roth Contribution Program
and the Contract, rollovers and trustee-to trustee transfers from
other Designated Roth Accounts).
4. In accordance with our procedures and in a form satisfactory to us, we
may accept rollovers from other funding vehicles under any Qualified
Roth Contribution Program of the same type in which the employee
participates as well as trustee-to-trustee transfers from other
funding vehicles under the same Qualified Roth Contribution Program
for which the participant is making elective deferral contributions to
the Contract.
5. No other contribution types (including employer contributions,
matching contributions, etc.) will be allowed as designated Roth
contributions, unless they become permitted under the Code.
6. If permitted under the federal tax law, we may permit both pre-tax
contributions under a plan as well as after-tax contributions under
that Plan's Qualified Roth Contribution Program to be made under the
same Contract as well as rollover contributions and contributions by
trustee-to-trustee transfers. In such cases, we will account
separately for the designated Roth contributions and the earnings
thereon from the contributions and earnings made under the pre-tax TSA
plan or pre-tax 401(k) plan (whether made as elective deferrals,
rollover contributions or trustee-to-trustee transfers). As between
the pre-tax or traditional Plan and the Qualified Roth Contribution
Program, we will allocate any living benefits or death benefits
provided under the Contract on a reasonable basis, as permitted under
the tax law. However, we reserve the right to require a separate TSA
Contract to accept designated Roth TSA contributions and a separate
Section 401(k) Contract to accept designated Roth 401(k)
contributions.
7. We may refuse to accept contributions made as rollovers and trustee-
to-trustee transfers, unless we are furnished with a breakdown as
between participant contributions and earnings at the time of the
contribution.
Many of the federal income tax rules pertaining to Designated Roth Accounts have
not yet been finalized. Both you and your employer should consult your own tax
and legal advisors prior to making or permitting contributions to be made to a
Qualified Roth Contribution Program.
The following general tax rules are based on our understanding of the Code and
any regulations issued through December 31, 2005, and are subject to change and
to different interpretation as well as additional guidance in respect to areas
not previously addressed:
- The employer must permit contributions under a pre-tax 403(b) or
pretax 401(k) plan in order to permit contributions to be irrevocably
designated and made part of the Qualified Roth Contribution Program.
- Elective deferral contributions to the Designated Roth Account must be
aggregated with all other elective deferral contributions made by a
taxpayer for purposes of the individual Code Section 402(g) limits and
the Code Section 414(v) limits (age 50+catch-up) as well as
contribution limits that apply under the Plan.
- In general, the same tax law rules with respect to restricted monies,
triggering events and permitted distributions will apply to the
Designated Roth Accounts under the Plan, if such amounts have been
held under any Designated Roth Account for at least 5 years, as apply
to the traditional pre-tax accounts under
26
the Plan ( e.g., death or disability of participant, severance from
employment, attainment of age 59 1/2), or hardship (withdrawals only
with respect to contributions), if permitted under the Plan).
- If the amounts have been held under any Designated Roth Account of a
participant for at least five years, and are made on account of death,
disability, or after attainment of age 59 1/2, then any withdrawal,
distribution or payment of these amounts is generally free of Federal
income tax ("Qualified Distribution").
- Unlike Roth IRAs, withdrawal, distributions and payments that do not
meet the five year rule will generally be taxed on a pro-rated basis
with respect to earnings and after-tax contributions. The 10% penalty
tax will generally apply on the same basis as a traditional pre-tax
account under the Plan. Additionally, rollover distributions may only
be made tax-free into another Designated Roth Account or into a Roth
IRA.
- Some states may not permit contributions to be made to a Qualified
Roth Contribution Program or may require additional conforming
legislation for these rules to become effective.
QUALIFIED PENSION AND PROFIT-SHARING PLANS
Like most other contributions made under a qualified pension or profit-sharing
trust described in Section 401 (a) of the Code and exempt from tax under Section
501(a) of the Code, a Purchase Payment made by an employer (including salary
reduction contributions under Section 401(k) of the Code) is not currently
taxable to the participant and increases in the value of a contract are not
subject to taxation until received by a participant or Beneficiary. For 2008,
the applicable limits are $46,000 for total contributions and $15,500 salary
reduction contributions made pursuant to Code Section 401(k). Additional "catch-
up contributions" may be made by individuals age 50 or over ($5,000 for 2008).
Distributions in the form of annuity payments are taxable to the participant or
Beneficiary as ordinary income in the year of receipt, except that any
distribution that is considered the participant's "investment in the contract"
is treated as a return of capital and is not taxable. Certain eligible rollover
distributions including most partial and full surrenders or term-for-years
distributions of less than 10 years are eligible for direct rollover to an
eligible retirement plan or to an IRA without federal income tax withholding.
If a distribution that is eligible for rollover is not directly rolled over to
another qualified retirement plan or IRA, 20% of the taxable amount must be
withheld. In addition, current tax may be avoided on eligible rollover
distributions that were not directly transferred to a qualified retirement
program if the participant makes a rollover contribution to a qualified
retirement plan or IRA within 60 days of the distribution.
Distributions must begin by April 1st of the calendar year following the later
of the calendar year in which you attain age 70 1/2 or the calendar year in
which you retire, except that if you are a 5% owner as defined in Code Section
416(i)(1)(B), distributions must begin by April 1st of the calendar year
following the calendar year in which you attain age 70 1/2. Certain other
mandatory distribution rules apply on the death of the participant.
An additional tax of 10% will apply to any taxable distribution received by the
participant before the age of 59 1/2, except by reason of death, disability or
as part of a series of payments for life or life expectancy, or at early
retirement at or after the age of 55. There are other statutory exceptions which
may apply in certain situations. Amounts attributable to salary reduction
contributions under Code Section 401(k) and income thereon may not be withdrawn
prior to severance from employment, death, total and permanent disability,
attainment of age 59 1/2, or in the case of hardship.
SECTION 457 PLANS
Section 457 of the Code allows employees and independent contractors of state
and local governments and tax-exempt organizations to defer a portion of their
salaries or compensation to retirement years without paying current income tax
on either the deferrals or the earnings on the deferrals. Such deferrals are
subject to limits similar to those applicable to 403(b) and 401(k) plans.
Such plans are not available for churches and qualified church controlled
organizations.
27
The Owner of contracts issued under Section 457 plans by non-governmental
employers is the employer of the participant and amounts may not be made
available to participants (or beneficiaries) until separation from service,
retirement or death or an unforeseeable emergency as determined by Treasury
Regulations. The proceeds of annuity contracts purchased by Section 457 plans
are subject to the claims of general creditors of the employer or contractor. A
different rule applies with respect to Section 457 plans that are established by
governmental employers. The contract must be for the exclusive benefit of the
plan participants (and their beneficiaries), and the governmental employer (and
their creditors) must have no claim on the contract.
Distributions must begin by April 1st of the calendar year following the later
of the calendar year in which the participant attains the age of 70 1/2 or the
calendar year in which the participant retires. Certain other mandatory
distribution rules apply upon the death of the participant.
All distributions from plans that meet the requirements of Section 457 of the
Code are taxable as ordinary income in the year paid or made available to the
participant or Beneficiary.
Generally, monies in your Contract can not be "made available" to you until you,
reach age 70 1/2, leave your job or your employer changes or have an unforeseen
emergency (as defined by the Code).
The tax rules for taxation of distributions and withdrawals work similarly as to
those for IRAs. However the 10% penalty tax only applies to distributions and
withdrawals that are attributable to rollovers from IRAs and other eligible
retirement plans, and do not apply at all to 457(b) plans of tax exempt
employers other than state or local governmental units. Distributions and
withdrawals under a 457(b) plan of a tax exempt employer that is not a
governmental unit are generally taxed under the rules applicable to wages.
Consult your tax advisor.
LOANS: In the case of a 457(b) plan maintained by a state or local government,
the plan may permit loans. The Code and applicable income tax regulations limit
the amount that may be borrowed from your 457(b) plan and all employer plans in
the aggregate and also require that loans be repaid, at a minimum, in scheduled
level payments over a certain term.
Your 457(b) plan will indicate whether plan loans are permitted. The terms of
the loan are governed by your loan agreement with the plan. Failure to satisfy
loan limits under the Code or to make any scheduled payments according to the
terms of your loan agreement and Federal tax law could have adverse tax
consequences. Consult a tax advisor and read your loan agreement and Contract
prior to taking any loan.
403(A)
GENERAL
The employer adopts a 403(a) plan as a qualified retirement plan to provide
benefits to participating employees. The plan generally works in a similar
manner to a corporate qualified retirement plan except that the 403(a) plan does
not have a trust or a trustee.
See the "General" headings under Income Taxes for a brief description of the tax
rules that apply to 403(a) annuities.
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
Under the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended,
certain special provisions may apply to the Contract if the Owner of a Section
403(b) plan Contract or the owner of a contract issued to certain qualified
plans requests that the Contract be issued to conform to ERISA or if the Company
has notice that the Contract was issued pursuant to a plan subject to ERISA.
ERISA requires that certain Annuity Options, withdrawals or other payments and
any application for a loan secured by the Contract may not be made until the
Participant has filed a Qualified Election with the plan administrator. Under
certain plans, ERISA also requires that a designation of a Beneficiary other
than the participant's spouse be deemed invalid unless the participant has filed
a Qualified Election.
A Qualified Election must include either the written consent of the
Participant's spouse, notarized or witnessed by an authorized plan
representative, or the participant's certification that there is no spouse or
that the spouse cannot be located.
28
The Company intends to administer all contracts to which ERISA applies in a
manner consistent with the direction of the plan administrator regarding the
provisions of the plan, in accordance with applicable law. Because these
requirements differ according to the plan, a person contemplating the purchase
of an annuity contract should consider the provisions of the plan.
FEDERAL INCOME TAX WITHHOLDING & ELIGIBLE ROLLOVER DISTRIBUTIONS
The portion of a distribution that is taxable income to the recipient will be
subject to federal income tax withholding, generally pursuant to Section 3405 of
the Code. The application of this provision is summarized below.
We are required to withhold 20% of the portion of your withdrawal that
constitutes an "eligible rollover distribution" for Federal income taxes. We are
not required to withhold this money if you direct us or the trustee or the
custodian of the plan to directly rollover your eligible rollover distribution
to a traditional IRA or another eligible retirement plan.
Generally, an "eligible rollover distribution" is any taxable amount you (or a
spousal designated beneficiary or "alternate payee" under the Code) receives
from your Contract. In certain cases, after-tax amounts may also be considered
eligible rollover distributions.
However, it does not include taxable distributions that are:
(1) Part of a series of substantially equal payments being made at least
annually for:
- your life or life expectancy
- both you and your beneficiary's lives or life expectancies or
- a specified period of 10 years or more
(2) Generally, income payments made under a permissible income annuity on or
after the required beginning date are not eligible rollover distributions
(3) Withdrawals to satisfy minimum distribution requirements
(4) Certain withdrawals on account of financial hardship
Other exceptions to the definition of eligible rollover distribution may exist.
Effective March 28, 2005, certain mandatory distributions made to participants
in an amount in excess of $1,000 must be automatically rolled over to an IRA
designated by the plan administrator, unless the participant elects to receive
it in cash or roll it over to a different IRA or eligible retirement plan of his
or her own choosing. Generally, transitional rules apply as to when plans have
to be amended. Special effective date rules apply for governmental plans and
church plans.
A distribution including a rollover that is not a direct rollover will require
the 20% withholding, and the 10% additional tax penalty on premature withdrawals
may apply to any amount not added back in the rollover. The 20% withholding may
be recovered when the participant or Beneficiary files a personal income tax
return for the year if a rollover was completed within 60 days of receipt of the
funds, except to the extent that the participant or spousal Beneficiary is
otherwise underwithheld or short on estimated taxes for that year.
OTHER NON-PERIODIC DISTRIBUTIONS (FULL OR PARTIAL REDEMPTIONS)
To the extent not subject to the mandatory 20% withholding as described in
above, the portion of a non-periodic distribution which constitutes taxable
income will be subject to federal income tax withholding, to the extent such
aggregate distributions exceed $200 for the year, unless the recipient elects
not to have taxes withheld. If an election to opt out of withholding is not
provided, 10% of the taxable portion of the distribution will be withheld as
federal income tax; provided that the recipient may elect any other percentage.
Election forms will be provided at the time distributions are requested. This
form of withholding applies to all annuity programs.
29
PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER THAN ONE
YEAR)
The portion of a periodic distribution that constitutes taxable income will be
subject to federal income tax withholding under the wage withholding tables as
if the recipient were married claiming three exemptions. A recipient may elect
not to have income taxes withheld or have income taxes withheld at a different
rate by providing a completed election form. Election forms will be provided at
the time distributions are requested. This form of withholding applies to all
annuity programs.
Recipients who elect not to have withholding made are liable for payment of
federal income tax on the taxable portion of the distribution. All recipients
may also be subject to penalties under the estimated tax payment rules if
withholding and estimated tax payments are not sufficient.
Recipients who do not provide a social security number or other taxpayer
identification number will not be permitted to elect out of withholding.
Additionally, United States citizens residing outside of the country, or U.S.
legal residents temporarily residing outside the country, are subject to
different withholding rules and cannot elect out of withholding.
TAXATION OF DEATH BENEFIT PROCEEDS
Amounts may be distributed from a Contract because of the death of an owner or
Annuitant. Generally, such amounts are includable in the income of the recipient
as follows: (i) if distributed in a lump sum, they are taxed in the same manner
as a full surrender of the Contract; or (ii) if distributed under a payment
option, they are taxed in the same way as Annuity Payments.
Under the Code, withdrawals need not be made by a particular age. However, it is
possible that the Internal Revenue Service may determine that the Contract must
be surrendered or annuity payments must commence by a certain age (e.g., 85 or
older) or your Contract may require that you commence payments by a certain age.
OTHER TAX CONSIDERATIONS
TREATMENT OF CHARGES FOR OPTIONAL BENEFITS
The Contract may provide one or more optional enhanced death benefits or other
minimum guaranteed benefit that in some cases may exceed the greater of purchase
price or the Contract Value. It is possible that the Internal Revenue Service
may take the position that the charges for the optional enhanced benefit(s) are
deemed to be taxable distributions to you. Although we do not believe that a
charge under such optional enhanced benefit should be treated as a taxable
withdrawal, you should consult with your tax adviser before selecting any rider
or endorsement to the Contract.
Certain living benefits may not be made available under contracts issued to a
designated beneficiary after the Owner's death (e.g. a "Stretch IRA" or a
Stretch NQ contract) or, where otherwise made available, may have limited value
due to minimum distributions required to be made under the tax law after the
owner's death. Consult your tax advisor.
Where made available under the Contract, certain optional benefits may be
inappropriate under IRA and other tax-qualified contracts due to required
minimum distribution requirements. Consult your tax advisor.
Final income tax regulations regarding minimum distribution requirements were
released in June 2004. These regulations affect both deferred and income
annuities. Under these new rules, effective with respect to minimum
distributions required for the 2006 distribution year, in general, the value of
all benefits under a deferred annuity (including death benefits in excess of
cash value, as well as all living benefits) must be added to the account value
in computing the amount required to be distributed over the applicable period.
We will provide you with additional information as to the amount of your
interest in the Contract that is subject to required minimum distributions under
this new rule and either compute the required amount for you or offer to do so
at your request. The new rules are not entirely clear and you should consult
your own tax advisors as to how these rules affect your own Contract.
30
GUARANTEED MINIMUM WITHDRAWAL BENEFIT (IF AVAILABLE UNDER YOUR
CONTRACT/CERTIFICATE)
If you have purchased a GMWB, where otherwise made available, note the
following:
The tax treatment of withdrawals under such a benefit is uncertain. It is
conceivable that the amount of potential gain could be determined based on the
remaining amounts guaranteed to be available for withdrawal at the time of the
withdrawal if greater than the Contract Value (prior to surrender charges). This
could result in a greater amount of taxable income in certain cases. In general,
at the present time, we intend to tax report such withdrawals using the Contract
Value rather than the remaining benefit to determine gain. However, in cases
where the maximum permitted withdrawal in any year under any version of the GMWB
exceeds the Contract Value, the portion of the withdrawal treated as taxable
gain (not to exceed the amount of the withdrawal) should be measured as the
difference between the maximum permitted withdrawal amount under the benefit and
the remaining after-tax basis immediately preceding the withdrawal.
We reserve the right to change our tax reporting practices where we determine
they are not in accordance with IRS guidance (whether formal or informal).
HURRICANE RELIEF
DISTRIBUTIONS: Your plan may provide for "qualified hurricane distributions"
pursuant to the Katrina Emergency Tax Relief Act of 2005 and the Gulf
Opportunity Zone Act of 2005. Subject to an aggregate limit of $100,000 among
all eligible retirement plans, a participant's qualified hurricane distributions
are not subject to the 10% early withdrawal penalty that might otherwise apply
to a qualified annuity under Section 72(t).
To the extent a participant "repays" a qualified hurricane distribution by
contributing within three years of the distribution date to an eligible
retirement plan that accepts rollover contributions, it will generally be
treated as a timely direct trustee-to-trustee transfer and will not be subject
to income tax. To the extent a participant does not repay a qualified hurricane
distribution within three years, he or she will include the distribution in
gross income ratably over the three-tax year period, beginning with the tax year
in which the distribution is received, unless the participant elects to opt out
of three-year averaging by including the qualified hurricane distribution in
gross income for the year it is received. Consult your independent tax advisor
to determine if hurricane relief is available to Your particular situation.
LOANS: Your plan may provide for increased limits and delayed repayment of
participant loans, where otherwise permitted by your plan, pursuant to the
Katrina Emergency Tax Relief Act of 2005 and the Gulf Opportunity Zone Act of
2005. An eligible retirement plan other than an IRA may allow a plan loan to
delay loan repayment by certain individuals impacted by Hurricanes Katrina, Rita
and Wilma, whose principal places of abode on certain dates were located in
statutorily defined disaster areas and who sustained an economic loss due to the
hurricane. Generally, if the due date for any repayment with respect to such
loan occurs during a period beginning on September 23, 2005 (for purposes of
Hurricane Katrina) or October 23, 2005 (for purposes of Hurricanes Rita and
Wilma) and ending on December 31, 2006, then such due date may be delayed for
one year. Note: For purposes of these loan rules, an individual cannot be a
qualified individual with respect to more than one hurricane. Consult your
independent tax advisor to determine if hurricane relief is available to Your
particular situation.
PUERTO RICO TAX CONSIDERATION
The Puerto Rico Internal Revenue Code of 1994 (the "1994 Code") taxes
distributions from non-qualified annuity contracts differently than in the
United States. Distributions that are not in the form of an annuity (including
partial surrenders and period certain payments) are treated under the 1994 Code
first as a return of investment. Therefore, a substantial portion of the amounts
distributed will generally be excluded from gross income for Puerto Rico tax
purposes until the cumulative amount paid exceeds your tax basis. The amount of
income on annuity distributions (payable over your lifetime) is also calculated
differently under the 1994 Code. Since Puerto Rico residents are also subject to
U.S. income tax on all income other than income sourced to Puerto Rico, and the
Internal Revenue Service issued guidance in 2004 which indicated that the income
from an annuity contract issued by a U.S. life insurer would be considered U.S.
source income, the timing of recognition of income from an annuity contract
could vary between the two jurisdictions. Although the 1994 Code provides a
credit against the Puerto Rico income tax for U.S. income taxes paid, an
individual may not get full credit because of the timing differences. You should
31
consult with a personal tax adviser regarding the tax consequences of purchasing
an annuity contract and/or any proposed distribution, particularly a partial
distribution or election to annuitize.
NON-RESIDENT ALIENS
Distributions to non-resident aliens ("NRAs") are subject to special and complex
tax and withholding rules under the Code with respect to U.S. source income,
some of which are based upon the particular facts and circumstances of the
Contract Owner, the beneficiary and the transaction itself. As stated above, the
IRS has taken the position that income from the Contract received by NRAs is
considered U.S. source income. In addition, Annuity Payments to NRAs in many
countries are exempt from U.S. tax (or subject to lower rates) based upon a tax
treaty, provided that the Contract Owner complies with the applicable
requirements. NRAs should seek guidance from a tax adviser regarding their
personal situation.
INFORMATION INCORPORATED BY REFERENCE
- --------------------------------------------------------------------------------
Under the Securities Act of 1933, the Company has filed with the Securities and
Exchange Commission ("SEC") a registration statement (the "Registration
Statement") relating to the Contracts offered by this prospectus. This
prospectus has been filed as a part of the Registration Statement and does not
contain all of the information set forth in the Registration Statement and the
exhibits, and reference is hereby made to such Registration Statement and
exhibits for further information relating to the Company and the Contracts.
The Company's annual report on Form 10-K was filed with the SEC on March 27,
2008 via EDGAR File No. 033-03094. The Company filed an amended annual report on
Form 10-K/A with respect to Items 7, 7A, 8 and 9A(T) on Form 10-K with the SEC
on May 14, 2008 via EDGAR File No. 033-03094. The Form 10-K, as amended by Form
10-K/A, contains information for the period ended December 31, 2007 about the
Company, including consolidated audited financial statements for the Company's
latest fiscal year. The Company also filed Forms 8-K on April 3, 2008, May 12,
2008 and January 21, 2009 via EDGAR File No. 033-03094. The Form 10-K and 10-
K/A, as updated by the three Form 8-Ks, are incorporated by reference into this
prospectus. All other reports filed by the Company pursuant to Section 13(a) or
15(d) of the Exchange Act (such as quarterly and periodic reports) or proxy or
information statements filed pursuant to Section 14 of the Exchange Act since
the end of the fiscal year ending December 31, 2007 are also incorporated by
reference into this prospectus. We are not incorporating by reference, in any
case, any documents or information deemed to have been furnished and not filed
in accordance with SEC rules.
There have been no material changes in the Company's affairs which have occurred
since the end of the latest fiscal year for which audited consolidated financial
statements were included in the latest Form 10-K/A or which have not been
described in a Form 10-Q or Form 8-K filed by the Company under the Exchange
Act.
If requested, the Company will furnish, without charge, a copy of any and all of
the reports or documents that have been incorporated by reference into this
prospectus. You may direct your requests to the Company at 1300 Hall Boulevard,
Bloomfield, Connecticut 06002-2910. The telephone number is 1-800-599-9460. You
may also access the incorporated reports and other documents at www.metlife.com.
You may also read and copy any materials that the Company files with the SEC at
the SEC's Public Reference Room at 100 F Street, N.E., Washington, DC 20549. The
public may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-202-551-8090. The SEC maintains an Internet site that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC at (http://www.sec.gov).
EXPERTS
- --------------------------------------------------------------------------------
Legal matters in connection with federal laws and regulations affecting the
issue and sale of the Contracts described in this prospectus and the
organization of the Company, its authority to issue such Contracts under
Connecticut law and the validity of the forms of the Contracts under Connecticut
law have been passed on by legal counsel for the Company.
32
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The consolidated financial statements and the related financial statement
schedules, incorporated in this Prospectus by reference from the Company's
Annual Report on Form 10-K/A (Amendment No.1) for the year ended December 31,
2007 has been audited by Deloitte & Touche LLP, an independent registered public
accounting firm, as stated in their report, which is incorporated herein by
reference (which report expresses an unqualified opinion and includes
explanatory paragraphs regarding changes in MetLife Insurance Company of
Connecticut and subsidiaries' method of accounting for deferred acquisition
costs as required by accounting guidance adopted on January 1, 2007, and the
restatement of the 2007 consolidated financial statements). Such financial
statements are incorporated in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
33
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APPENDIX A
- --------------------------------------------------------------------------------
INFORMATION CONCERNING QUALIFIED PLANS
Plans eligible to purchase the Contract are pension and profit sharing plans
qualified under Section 401(a) of the Internal Revenue Code, Section 403(b)
plans, and eligible state deferred compensation plans under Section 457 of the
Code ("Qualified Plans").
To apply for a group annuity contract, the trustee or other applicant must
complete an application or purchase order for the Group Annuity Contract and
make a Purchase Payment. A group annuity contract will then be issued to the
applicant. While no certificates are issued, each Purchase Payment and the
Account established thereby are confirmed to the Contract Owner. Each account
will have its own optional Guarantee Period and Guaranteed Interest Rate.
Surrenders under the Group Annuity Contract may be made at the election of the
Contract Owner, from the Account established under the Contract. Account
surrenders are subject to the same limitations, adjustments and charges as
surrenders made under a certificate (see "Surrenders"). Surrender Values may be
taken in cash or applied to purchase annuities for the Contract Owners'
Qualified Plan participants.
Because there are no individual participant accounts, the qualified group
annuity contract issued in connection with a Qualified Plan does not provide for
death benefits. Annuities purchased for Qualified Plan participants may provide
for a payment upon the death of the Annuitant depending on the option chosen
(see "Annuity Options"). Additionally, since there are no Annuitants prior to
the actual purchase of an Annuity by the Contract Owner, the provisions
regarding the Annuity Commencement Date are not applicable.
A-1
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APPENDIX B
- --------------------------------------------------------------------------------
MARKET VALUE ADJUSTMENT
The application of a Market Value Adjustment may adjust up or down your account
value. The following describes the amount the Market Value Adjustment applies
to:
Maturity Value = [ (Current Account Value -- FI) x (1 + iG) (t/365)]
<Table>
___ _1_ ___
Market Adjusted Value = [ (Maturity Value) (1 + iC) (t/365) ]
</Table>
- where: "FI" is the available free interest credited for the Previous
Certificate Year, "iG" is the Guaranteed Credited rate as stated on
the contract specification page, "iC" is the current Guaranteed
Interest Rate for a Guarantee Period of "t" days, where "t" is the
number of days remaining in the Guarantee Period adjusted for leap
years.
The total amount available to customers, prior to any charges or premium taxes,
is: Market Adjusted Value + free interest.
The current Guaranteed Interest Rate is declared periodically by the Company and
is based on the rate (straight line interpolation between whole years) which the
Company is then paying on premiums paid under this class of Contracts with the
same maturity date as the Purchase Payment to which the formula is being
applied.
In New York State the Guaranteed Interest Rate will not be less than 3.00%.
ILLUSTRATION OF A MARKET VALUE ADJUSTMENT
<Table>
Purchase Payment: $50,000.00
Guarantee Period: 5 years
Guaranteed Interest Rate: 5.50% Effective Annual Rate
</Table>
The following examples illustrate how the Market Value Adjustment may affect the
values of your Contract. In these examples, a Purchase Payment of $50,000 was
made to the Contract. After one year of the Guarantee Period, the Account Value
(i.e., the Purchase Payment plus accumulated interest) would be $52,750.
The Market Adjusted Value is calculated based on your then current Account Value
less any available free interest, and is based on a rate the Company is
crediting at the time on new Purchase Payments of the same term-to-maturity as
the time remaining in your Guarantee Period. One year after the Purchase Payment
was made, you would have four years remaining in the five-year Guarantee Period.
EXAMPLE OF A NEGATIVE MARKET VALUE ADJUSTMENT
A negative Market Value Adjustment results when interest rates have increased
since the date the Purchase Payment was made. Assume interest rates have
increased one year after the Purchase Payment and the Company is crediting 7.00%
for a four-year Guarantee Period.
The Maturity Value would be:
$61,941.23 = ($52,750.00 -- $2,750) x (1 + .055)(4)
The Market Adjusted Value would be:
<Table>
$47,254.67 = [ ($61,941.23) ___1____ ]
- ------------ - -------- -
(1 + .07)(4)
</Table>
Total amount available, prior to charges and premium taxes:
$50,004.67 = $47,254.67 + $2,750.00
B-1
EXAMPLE OF A POSITIVE MARKET VALUE ADJUSTMENT
A positive Market Value Adjustment results when interest rates have decreased
since the date the Purchase Payment was made. Assume interest rates have
decreased one year after the Purchase Payment and the Company is crediting 3.50%
for a four-year Guarantee Period.
The Maturity Value would be:
$61,941.23 = ($52,750.00 -- $2,750) x (1 + .055)(4)
The Market Adjusted Value would be:
<Table>
$53,978.21 = [ ($61,941.23) ____1____ ]
- ------------ - --------- -
(1 + .035)(4)
</Table>
Total amount available, prior to charges and premium taxes:
$56,728.21 = $53,978.21 + $2,750.00
These examples illustrate what may happen when interest rates increase or
decrease from the beginning of a Guarantee Period. A particular Market Value
Adjustment may have a greater or lesser impact than that shown in these
examples, depending on how much interest rates have changed since the beginning
of a Guarantee Period and the amount of time remaining to maturity. In addition,
a surrender charge may be assessed on surrenders made before the Purchase
Payment has been under the Contract for five years.
B-2
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"MTM"
METLIFE TARGET MATURITY
MODIFIED GUARANTEED ANNUITY CONTRACTS
ISSUED BY
METLIFE INSURANCE COMPANY OF CONNECTICUT
1300 HALL BOULEVARD
BLOOMFIELD, CONNECTICUT 06002
Book 28 January 23, 2009