Filed pursuant to
Rule 424(b)(3)
333-178884
333-178889
METLIFE TARGET MATURITY MODIFIED GUARANTEED ANNUITY ("MTM")
T-MARK MODIFIED GUARANTEED ANNUITY ("T-MARK")
SUPPLEMENT DATED APRIL 28, 2014
TO THE PROSPECTUSES DATED APRIL 30, 2012
This supplement updates information in, and should be read in conjunction
with, the Prospectuses dated April 30, 2012. It should be read in its entirety
and kept together with your Prospectus for future reference. You can obtain a
copy of the April 30, 2012 Prospectuses by writing to MetLife Insurance Company
of Connecticut, 1300 Hall Boulevard, Bloomfield, Connecticut, 06002-2910.
Certain terms used in this supplement have special meanings. If a term is
not defined in this supplement, it has the meaning given to it in the
applicable Prospectus.
1. The new address for MetLife Investors Distribution Company is 1095 Avenue of
the Americas, New York, NY 10036.
2. THE INSURANCE COMPANY - RISK
Substitute the following as the description of the insurance company (first
four sentences of MTM and first paragraph of T-Mark):
MetLife Insurance Company of Connecticut ("MetLife of Connecticut") is a
stock insurance company chartered in 1863 in Connecticut and continuously
engaged in the insurance business since that time. It is licensed to conduct
life insurance business in all states of the United States except New York, 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.
In 2013, MetLife, Inc. announced its plans to merge MetLife of Connecticut,
MetLife Investors Insurance Company ("MetLife Investors"), MetLife Investors
USA Insurance Company ("MetLife Investors USA"), and Exeter Reassurance
Company, Ltd. ("Exeter Reassurance"), to create one larger U.S.-based and
U.S.-regulated life insurance company. MetLife Investors and MetLife Investors
USA, like MetLife of Connecticut, are U.S. insurance companies that issue
variable insurance products in addition to other products. Exeter Reassurance
is a direct subsidiary of MetLife, Inc. that mainly reinsures guarantees
associated with variable annuity products issued by U.S. insurance companies
that are direct or indirect subsidiaries of MetLife, Inc. MetLife of
Connecticut, which is expected to be renamed and domiciled in Delaware, will be
the surviving entity. These mergers are expected to occur towards the end of
2014, subject to regulatory approvals.
3. Add the following new section after "Section 403(b) Plan Terminations" in
"The Contracts":
OTHER PLAN TERMINATIONS
Upon termination of a retirement plan that is not a Section 403(b) plan,
Your employer is generally required to distribute Your Plan benefits under the
Contract to You.
This distribution is in cash. The distribution is a withdrawal under the
Contract and any amounts withdrawn are subject to a Market Value Adjustment and
any applicable Surrender Charges. Outstanding loans, if available, will be
satisfied (paid) from Your cash benefit prior to its distribution to You. In
addition, Your cash distributions are subject to withholding ordinary income
tax and applicable federal income tax penalties. (See "Federal Tax
Considerations.") Surrender Charges will be waived if the net distribution is
made under the exceptions listed in the "Surrenders" section of the prospectus.
However, Your employer may not give You the opportunity to instruct the Company
to make, at a minimum, a direct transfer to another funding option or annuity
contract issued by Us or one of Our affiliates which may avoid a Surrender
Charge. In that case, You will receive the net cash distribution, less any
applicable Market Value Adjustment, Surrender Charge and withholding.
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4. Add the following new section before "Surrenders":
SECTION 403(B) COLLATERALIZED LOANS
If Your employer's Plan and Section 403(b) Contract permits loans, such
loans will be made only from the Contract up to certain limits. In that case,
We credit Your Accumulated Value or Account Value 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 Contract and all of Your employer Plans in the aggregate and
also require that loans be repaid, at a minimum, in scheduled level payments
over a proscribed term.
Your employer's Plan and Contract will indicate whether 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 Your tax adviser and read Your loan agreement
and Contract prior to taking any loan.
5. Delete "Federal Tax Considerations" and substitute the following:
FEDERAL TAX CONSIDERATIONS
INTRODUCTION
The following information on taxes is a general discussion of the subject.
It is not intended as tax advice. The Internal Revenue Code ("Code") and the
provisions of the Code that govern the Contract are complex and subject to
change. The applicability of federal income tax rules may vary with your
particular circumstances. This discussion does not include all the federal
income tax rules that may affect You and your Contract. Nor does this
discussion address other federal tax consequences (such as estate and gift
taxes, sales to foreign individuals or entities), or state or local tax
consequences, which may affect your investment in the Contract. As a result,
You should always consult a tax adviser for complete information and advice
applicable to your individual situation.
You are responsible for determining whether your purchase of a Contract,
withdrawals, income payments and any other transactions under your Contract
satisfy applicable tax law. 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").
We do not expect to incur federal, state or local income taxes on the
earnings or realized capital gains attributable to the Separate Account.
However, if we do incur such taxes in the future, we reserve the right to
charge amounts allocated to the Separate Account for these taxes.
To the extent permitted under federal tax law, we may claim the benefit of
the corporate dividends received deduction and of certain foreign tax credits
attributable to taxes paid by certain of the Portfolios to foreign
jurisdictions.
Any Code reference to "spouse" includes those persons who are married
spouses under state law, regardless of sex.
NON-QUALIFIED ANNUITY CONTRACTS
A "non-qualified" annuity Contract discussed here assumes the Contract is an
annuity Contract for federal income tax purposes, but the Contract is not held
in a tax qualified "Plan" defined by the Code. Tax qualified Plans include
arrangements described in Code Sections 401(a), 401(k), 403(a), 403(b) or tax
sheltered annuities ("TSA"), 408 or "IRAs" (including SEP and SIMPLE IRAs),
408A or "Roth IRAs" or 457(b) or governmental 457(b) Plans. Contracts owned
through such Plans are referred to below as "qualified" contracts.
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ACCUMULATION
Generally, an owner of a non-qualified annuity Contract is not taxed on
increases in the value of the Contract until there is a distribution from the
Contract, either as Surrenders, partial withdrawal or income payments. This
deferral of taxation on accumulated value in the Contract is limited to
Contracts owned by or held for the benefit of "natural persons." A Contract
will be treated as held by a natural person even if the nominal owner is a
trust or other entity which holds the Contract as an agent for a natural person.
In contrast, a Contract owned by other than a "natural person," such as a
corporation, partnership, trust or other entity, will be taxed currently on the
increase in accumulated value in the Contract in the year earned. Note that in
this regard, an employer which is the owner of an annuity Contract under a
non-qualified deferred compensation arrangement for its employees would be
considered a non-natural owner and the annual increase in the Account Balance
would be subject to current income taxation.
SURRENDERS OR WITHDRAWALS -- EARLY DISTRIBUTION
If You take a withdrawal from your Contract, or surrender your Contract
prior to the date You commence taking annuity or "income" payments (the
"Annuity Starting Date"), the amount You receive will be treated first as
coming from earnings (and thus subject to income tax) and then from your
Purchase Payments (which are not subject to income tax). If the accumulated
value is less than your Purchase Payments upon surrender of your Contract, You
might be able to claim the loss on your federal income taxes as a miscellaneous
itemized deduction.
The portion of any withdrawal or distribution from an annuity Contract that
is subject to income tax will also be subject to a 10% federal income tax
penalty for "early" distribution if such withdrawal or distribution is taken
prior to You reaching age 59 1/2, unless the distribution was made:
(a)on account of your death or disability,
(b)as part of a series of substantially equal periodic payments payable for
your life or joint lives of You and your designated beneficiary, or
(c)under certain immediate income annuities providing for substantially
equal payments made at least annually.
If You receive systematic payments that You intend to qualify for the
"substantially equal periodic payments" exception noted above, any
modifications (except due to death or disability) to your payment before
age 59 1/2 or within five years after beginning these payments, whichever is
later, will result in the retroactive imposition of the 10% federal income tax
penalty with interest. Such modifications may include additional Purchase
Payments or withdrawals (including tax-free transfers or rollovers of income
payments) from the Contract.
AGGREGATION
If You purchase two or more deferred annuity Contracts from MetLife (or its
affiliates) during the same calendar year (after October 21, 1988), the law
requires that all such Contracts must be treated as a single Contract for
purposes of determining whether any payments not received as an annuity (e.g.,
withdrawals) will be includible in income. Aggregation could affect the amount
of a withdrawal that is taxable and subject to the 10% federal income tax
penalty described above. Since the IRS may require aggregation in other
circumstances as well, You should consult a tax adviser if You are purchasing
more than one annuity Contract from the same insurance company in a single
calendar year. Aggregation does not affect distributions paid in the form of an
annuity (See "Taxation of Payments in Annuity Form" below).
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EXCHANGES/TRANSFERS
The annuity Contract may be exchanged in whole or in part for another
annuity contract or a long-term care insurance policy. The exchange for another
annuity contract may be a tax-free transaction provided that, among other
prescribed IRS conditions, no amounts are distributed from either contract
involved in the exchange for 180 days following the date of the exchange --
other than Annuity Payments made for life, joint lives, or for a term of 10
years or more. Otherwise, a withdrawal or "deemed" distribution may be
includible in your taxable income (plus a 10% federal income tax penalty) to
the extent that the accumulated value of your annuity exceeds your investment
in the Contract (your "gain"). The opportunity to make partial annuity
exchanges was provided by the IRS in 2011 and some ramifications of such an
exchange remain unclear. If the annuity Contract is exchanged in part for an
additional annuity contract, a distribution from either contract may be taxable
to the extent of the combined gain attributable to both contracts, or only to
the extent of your gain in the contract from which the distribution is paid. It
is not clear whether this guidance applies to a partial exchange involving
long-term care contracts. Consult your tax adviser prior to a partial exchange.
A transfer of ownership of the Contract, or the designation of an Annuitant
or other beneficiary who is not also the Contract owner, may result in income
or gift tax consequences to the Contract owner. You should consult your tax
adviser if You are considering such a transfer or assignment.
DEATH BENEFITS
The death benefit is taxable to the recipient in the same manner as if paid
to the Contract owner (under the rules for withdrawals or income payments,
whichever is applicable).
After your death, any death benefit determined under the Contract must be
distributed according to certain rules. The method of distribution that is
required depends on whether You die before or after the Annuity Starting Date.
If You die on or after the Annuity Starting Date, the remaining portion of the
interest in the Contract must be distributed at least as rapidly as under the
method of distribution being used as of the date of death. If You die before
the Annuity Starting Date, the entire interest in the Contract must be
distributed within five (5) years after the date of death, or as periodic
payments over a period not extending beyond the life or life expectancy of the
designated beneficiary (provided such payments begin within one year of your
death). Your designated beneficiary is the person to whom benefit rights under
the Contract pass by reason of death; the beneficiary must be a natural person
in order to elect a periodic payment option based on life expectancy or a
period exceeding five years. Additionally, if the annuity is payable to (or for
the benefit of) your surviving spouse, that portion of the Contract may be
continued with your spouse as the owner. For Contracts owned by a non-natural
person, the required distribution rules apply upon the death of the Annuitant.
If there is more than one Annuitant of a Contract held by a non-natural person,
then such required distributions will be triggered by the death of the first
co-Annuitant.
TAXATION OF PAYMENTS IN ANNUITY FORM
When payments are received from the Contract in the form of an annuity,
normally the Annuity Payments are taxable as ordinary income to the extent that
payments exceed the portion of the payment determined by applying the exclusion
ratio to the entire payment. The exclusion ratio of a Contract is determined at
the time the Contract's accumulated value is converted to an annuity form of
distribution. Generally, the applicable exclusion ratio is your investment in
the Contract divided by the total payments You are expected to receive based on
IRS rules which consider such factors, such as the form of annuity and
mortality. The excludable portion of each Annuity Payment is the return of
investment in the Contract and it is excludable from your taxable income until
your investment in the Contract is fully recovered. We will make this
calculation for You. However, it is possible that the IRS could conclude that
the taxable portion of income payments under a non-qualified Contract is an
amount greater - or less -- than the taxable amount determined by us and
reported by us to You and the IRS.
Once You have recovered the investment in the Contract, further Annuity
Payments are fully taxable. If You die before your investment in the Contract
is fully recovered, the balance may be deducted on your last tax return, or if
Annuity Payments continue after your death, the balance may be deducted by your
beneficiary.
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If You receive payments that You intend to qualify for the "substantially
equal periodic payments" exception noted above, any modifications (except due
to death or disability) to your payment before age 59 1/2 or within five years
after beginning these payments, whichever is later, will result in the
retroactive imposition of the 10% federal income tax penalty with interest.
Such modifications may include additional Purchase Payments or withdrawals
(including tax-free transfers or rollovers of income payments) from the
Contract.
If the Contract allows, You may elect to convert less than the full value of
your Contract to an annuity form of pay-out (i.e., "partial annuitization.") In
this case, your investment in the Contract will be prorated between the
annuitized portion of the Contract and the deferred portion. An exclusion ratio
will apply to the Annuity Payments as described above, provided the annuity
form You elect is payable for at least 10 years or for the life of one or more
individuals.
3.8% TAX ON NET INVESTMENT INCOME
Federal tax law imposes a 3.8% Medicare tax on the lesser of:
(1)the taxpayer's "net investment income," (from non-qualified annuities,
interest, dividends, and other investments, offset by specified
allowable deductions), or
(2)the taxpayer's modified adjusted gross income in excess of a specified
income threshold ($250,000 for married couples filing jointly, $125,000
for married couples filing separately, and $200,000 otherwise).
"Net investment income" in Item 1 above does not include distributions from
tax qualified Plans, (i.e., arrangements described in Code Sections 40l(a),
403(a), 403(b), 408, 408A or 457(b), but such income will increase modified
adjusted gross income in Item 2 above.
You should consult your tax adviser regarding the applicability of this tax
to income under your annuity Contract.
PUERTO RICO TAX CONSIDERATIONS
The Puerto Rico Internal Revenue Code of 2011 (the "2011 PR Code") taxes
distributions from non-qualified annuity contracts differently than in the U.S.
Distributions that are not in the form of an annuity (including partial
Surrenders and period certain payments) are treated under the 2011 PR Code
first as a return of investment. Therefore, a substantial portion of the
amounts distributed generally will 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 in annuity form (payable over
your lifetime) is also calculated differently under the 2011 PR Code. Since the
U.S. source income generated by a Puerto Rico bona fide resident is subject to
U.S. income tax and the IRS 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 2011 PR
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 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 if You are a
resident of Puerto Rico.
QUALIFIED ANNUITY CONTRACTS
INTRODUCTION
The Contract may be purchased through certain types of retirement Plans that
receive favorable treatment under the Code ("tax qualified Plans").
Tax-qualified Plans include arrangements described in Code Sections 40l(a),
40l(k), 403(a), 403(b) or tax sheltered annuities ("TSA"), 408 or "IRAs
(including SEP and SIMPLE
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IRAs), 408A or "Roth IRAs" or 457 (b) or 457(b) governmental Plans. Extensive
especial tax rules apply to qualified Plans and to the annuity Contracts used
in connection with these Plans. Therefore, the following discussion provides
only general information about the use of the Contract with the various types
of qualified Plans. Adverse tax consequences may result if You do not ensure
that contributions, distributions and other transactions with respect to the
Contract comply with the law.
The rights to any benefit under the Plan will be subject to the terms and
conditions of the Plan itself as well as the terms and conditions of the
Contract.
We exercise no control over whether a particular retirement Plan or a
particular contribution to the Plan satisfies the applicable requirements of
the Code, or whether a particular individual is entitled to participate or
benefit under a Plan.
All qualified Plans and arrangements receive tax deferral under the Code.
Since there are no additional tax benefits in funding such retirement
arrangements with an annuity, there should be reasons other than tax deferral
for acquiring the annuity within the Plan. Such non-tax benefits may include
additional insurance benefits, such as the availability of a guaranteed income
for life.
A Contract may also be available in connection with an employer's
non-qualified deferred compensation Plan and qualified governmental excess
benefit arrangement to provide benefits to certain employees in the Plan. The
tax rules regarding these Plans are complex. We do not provide tax advice.
Please consult your tax adviser about your particular situation.
ACCUMULATION
The tax rules applicable to qualified Plans vary according to the type of
Plan and the terms and conditions of the Plan itself. Both the amount of the
contribution that may be made and the tax deduction or exclusion that You may
claim for that contribution are limited under qualified Plans.
Purchase payments or contributions to IRAs or tax qualified retirement Plans
of an employer may be taken from current income on a before tax basis or after
tax basis. Purchase payments made on a "before tax" basis entitle You to a tax
deduction or are not subject to current income tax. Purchase payments made on
an "after tax" basis do not reduce your taxable income or give You a tax
deduction. Contributions may also consist of transfers or rollovers as
described below which are not subject to the annual limitations on
contributions.
The Contract will accept as a single purchase payment a transfer or rollover
from another IRA or rollover from an eligible retirement Plan of an employer
(i.e., 401(a), 401(k), 403(a), 403(b) or governmental 457(b) Plan.) It will
also accept a rollover or transfer from a SIMPLE IRA after the taxpayer has
participated in such arrangement for at least two years. As part of the single
purchase payment, the IRA Contract will also accept an IRA contribution subject
to the Code limits for the year of purchase.
For income annuities established in accordance with a distribution option
under a retirement Plan of an employer (e.g., 401(a), 401(k), 403(a), 403(b) or
457(b) Plan), the Contract will only accept as its single purchase payment a
transfer from such employer retirement Plan.
TAXATION OF ANNUITY DISTRIBUTIONS
If contributions are made on a "before tax" basis, You generally pay income
taxes on the full amount of money You withdraw as well as income earned under
the Contract. Withdrawals attributable to any after-tax contributions are your
basis in the Contract and not subject to income tax (except for the portion of
the withdrawal allocable to earnings). Under current federal income tax rules,
the taxable portion of distributions under annuity contracts and qualified
Plans (including IRAs) is not eligible for the reduced tax rate applicable to
long-term capital gains and qualifying dividends.
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If You meet certain requirements, your Roth IRA, Roth 403(b) and Roth 40l(k)
earnings are free from federal income taxes.
With respect to IRA Contracts, we will withhold a portion of the taxable
amount of your withdrawal for income taxes, unless You elect otherwise. The
amount we withhold is determined by the Code.
WITHDRAWALS PRIOR TO AGE 59 1/2
A taxable withdrawal or distribution from a qualified Plan which is subject
to income tax may also be subject to a 10% federal income tax penalty for
"early" distribution if taken prior to age 59 1/2, unless an exception
described below applies.
These exceptions include distributions made:
(a)on account of your death or disability, or
(b)as part of a series of substantially equal periodic payments payable for
your life or joint lives of You and your designated beneficiary and You
are separated from employment.
If You receive systematic payments that You intend to qualify for the
"substantially equal periodic payments" exception noted above, any
modifications (except due to death or disability) to your payment before age
59 1/2 or within five years after beginning these payments, whichever is later,
will result in the retroactive imposition of the 10% federal income tax penalty
with interest. Such modifications may include additional Purchase Payments or
withdrawals (including tax-free transfers or rollovers of income payments) from
the Contract.
In addition, a withdrawal or distribution from a qualified annuity Contract
other than an IRA (including SEPs and SIMPLEs) will avoid the penalty if: (1)
the distribution is on separation from employment after age 55; (2) the
distribution is made pursuant to a qualified domestic relations order ("QDRO'
)" (3) the distribution is to pay deductible medical expenses; or (4) if the
distribution is to pay IRS levies (and made after December 31, 1999).
In addition to death, disability and as part of a series of substantially
equal periodic payments as indicated above, a withdrawal or distribution from
an IRA (including SEPs and SIMPLEs and Roth IRAs) will avoid the penalty (1) if
the distribution is to pay deductible medical expenses; (2) if the distribution
is to pay IRS levies (and made after December 31, 1999); (3) if the
distribution is used to pay for medical insurance (if You are unemployed),
qualified higher education expenses, or for a qualified first time home
purchase up to $10,000. Other exceptions may be applicable under certain
circumstances and special rules may be applicable in connection with the
exceptions enumerated above.
ROLLOVERS
Your Contract is non-forfeitable (i.e., not subject to the claims of your
creditors) and non transferable (i.e., You may not transfer it to someone else).
Nevertheless, Contracts held in certain employer Plans subject to ERISA may
be transferred in part pursuant to a QDRO.
Under certain circumstances, You may be able to transfer amounts distributed
from your Contract to another eligible retirement Plan or IRA.
Generally, a distribution may be eligible for rollover. Certain types of
distributions cannot be rolled over, such as distributions received on account
of:
(a)minimum distribution requirements, or
(b)financial hardship.
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20% WITHHOLDING ON ELIGIBLE ROLLOVER DISTRIBUTIONS
For certain qualified employer Plans, we are required to withhold 20% of the
taxable portion of your withdrawal that constitutes an "eligible rollover
distribution" for federal income taxes. The amount we withhold is determined by
the Code. You may avoid withholding if You assign or transfer a withdrawal from
this Contract directly into another qualified Plan or IRA. Similarly, You may
be able to avoid withholding on a transfer into this Contract from an existing
qualified Plan You may have with another provider by arranging to have the
transfer made directly to us. For taxable withdrawals that are not "eligible
rollover distributions," the Code requires different withholding rules which
determine the withholding amounts.
DEATH BENEFITS
The death benefit is taxable to the recipient in the same manner as if paid
to the Contract owner or Plan Participant (under the rules for withdrawals or
income payments, whichever is applicable).
Distributions required from a qualified annuity Contract following your
death depend on whether You die before You had converted your Contract to an
annuity form and started taking Annuity Payments (your Annuity Starting Date).
If You die on or after your Annuity Starting Date, the remaining portion of the
interest in the Contract must be distributed at least as rapidly as under the
method of distribution being used as of the date of death. If You die before
your Annuity Starting Date, the entire interest in the Contract must be
distributed within five (5) years after the date of death, or as periodic
payments over a period not extending beyond the life or life expectancy of the
designated beneficiary (provided such payments begin within one year of your
death). Your designated beneficiary is the person to whom benefit rights under
the Contract pass by reason of death; the beneficiary must be a natural person
in order to elect a periodic payment option based on life expectancy or a
period exceeding five years. For required minimum distributions following the
death of the Annuitant of a qualified Contract, the five-year rule is applied
without regard to calendar year 2009. For instance, for a Contract Owner who
died in 2007, the five-year period would end in 2013 instead of 2012. The
required minimum distribution rules are complex, so consult your tax adviser
because the application of these rules to your particular circumstances may
have been impacted by the 2009 required minimum distribution waiver.
Additionally, if the annuity is payable to (or for the benefit of) your
surviving spouse, that portion of the Contract may be continued with your
spouse as the owner. If your spouse is your beneficiary, and your Contract
permits, your spouse may delay the start of these payments until December 31 of
the year in which You would have reached age 70 1/2.
If your spouse is your beneficiary, your spouse may be able to rollover the
death proceeds into another eligible retirement Plan in which he or she
participates, if permitted under the receiving Plan. Alternatively, if your
spouse is your sole beneficiary, he or she may elect to rollover the death
proceeds into his or her own IRA.
If your beneficiary is not your spouse and your Plan and Contract permit,
your beneficiary may be able to rollover the death proceeds via a direct
trustee-to-trustee transfer into an inherited IRA. However a non-spouse
beneficiary may not treat the inherited IRA as his or her own IRA.
Additionally, for Contracts issued in connection with qualified Plans
subject to ERISA, the spouse or ex-spouse of the owner may have rights in the
Contract. In such a case, the owner may need the consent of the spouse or
ex-spouse to change annuity options or make a withdrawal from the Contract.
REQUIRED MINIMUM DISTRIBUTIONS
Generally, You must begin receiving retirement Plan withdrawals by April 1
following the latter of:
(a)the calendar year in which You reach age 70 1/2, or
(b)the calendar year You retire, provided You do not own more than 5% of
our employer.
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For IRAs (including SEPs and SIMPLEs), You must begin receiving withdrawals
by April 1 of the year after You reach age 70 1/2 even if You have not retired.
A tax penalty of 50% applies to the amount by which the required minimum
distribution exceeds the actual distribution.
You may not satisfy minimum distributions for one employer's qualified Plan
(i.e., 401(a), 403(a), 457(b)) with distributions from another qualified Plan
of the same or a different employer. However, an aggregation rule does apply in
the case of IRAs (including SEPs and SIMPLEs) or 403(b) Plans. The minimum
required distribution is calculated with respect to each IRA, but the aggregate
distribution may be taken from any one or more of your IRAs/SEPs. Similarly,
the amount of required minimum distribution is calculated separately with
respect to each 403(b) arrangement, but the aggregate amount of the required
distribution may be taken from any one or more of the your 403(b) Plan
contracts.
Complex rules apply to the calculation of these withdrawals. In general,
income tax regulations permit income payments to increase based not only with
respect to the investment experience of the Portfolios but also with respect to
actuarial gains.
The regulations also require that the value of benefits under a deferred
annuity including certain death benefits in excess of Contract value must be
added to the amount credited to Your Account in computing the amount required
to be distributed over the applicable period. We will provide You with
additional information regarding the amount that is subject to minimum
distribution under this rule. You should consult your own tax adviser as to how
these rules affect your own distribution under this rule.
If You intend to receive your minimum distributions which are payable over
the joint lives of You and a beneficiary who is not your spouse (or over a
period not exceeding the joint life expectancy of You and your non-spousal
beneficiary), be advised that federal tax rules may require that payments be
made over a shorter period or may require that payments to the beneficiary be
reduced after your death to meet the minimum distribution incidental benefit
rules and avoid the 50% excise tax. You should consult your own tax adviser as
to how these rules affect your own Contract.
Required minimum distribution rules that apply to other types of IRAs while
You are alive do not apply to Roth IRAs. However, in general, the same rules
with respect to minimum distributions required to be made to a beneficiary
after your death under other IRAs do apply to Roth IRAs.
ADDITIONAL INFORMATION REGARDING TSA (ERISA AND NON-ERISA) 403(B)
SPECIAL RULES REGARDING EXCHANGES
In order to satisfy tax regulations, contract exchanges within a 403(b) Plan
after September 24, 2007, must, at a minimum, meet the following requirements:
(1) the Plan must allow the exchange; (2) the exchange must not result in a
reduction in a Participant's or a beneficiary's accumulated benefit; (3) the
receiving contract includes distribution restrictions that are no less
stringent than those imposed on the contract being exchanged; and (4) if the
issuer receiving the exchanges is not part of the Plan, the employer enters
into an agreement with the issuer to provide information to enable the contract
provider to comply with Code requirements. Such information would include
details concerning severance from employment, hardship withdrawals, loans and
tax basis. You should consult your tax or legal counsel for any advice relating
to Contract exchanges or any other matter relating to these regulations.
WITHDRAWALS
If You are under age 59 1/2, You generally cannot withdraw money from your
TSA Contract unless the withdrawal:
(a)Related to Purchase Payments made prior to 1989 and pre-1989 earnings on
those Purchase Payments;
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(b)Is exchanged to another permissible investment under your 403(b) Plan;
(c)Relates to contributions to an annuity contract that are not salary
reduction elective deferral, if your Plan allows it;
(d)Occurs after You die, leave your job or become disabled (as defined by
the Code);
(e)Is for financial hardship (but only to the extent of elective
deferrals), if your Plan allows it;
(f)Relates to distributions attributable to certain TSA Plan terminations,
if the conditions of the Code are met;
(g)Relates to rollover or after-tax contributions; or
(h)Is for the purchase of permissive service credit under a governmental
defined benefit Plan.
In addition, a Section 403(b) Contract is permitted to distribute retirement
benefits attributable to pre-tax contributions other than elective deferrals to
the Participant no earlier than upon the earlier of the Participant's severance
from employment or upon the prior occurrence of some event, such as after a
fixed number of years, the attainment of a stated age or disability.
ADDITIONAL INFORMATION REGARDING IRAS
PURCHASE PAYMENTS
Traditional IRA Purchase Payments (except for permissible rollovers and
direct transfers) are generally not permitted after You attain age 70 1/2.
Except for permissible rollovers and direct transfers, Purchase Payments for
individuals are limited in the aggregate to the lesser of 100% of compensation
or the deductible amount established each year under the Code. A purchase
payment up to the deductible amount can also be made for a non-working spouse
provided the couple's compensation is at least equal to their aggregate
contributions. Individuals age 50 and older are permitted to make additional
"catch-up" contributions if they have sufficient compensation. If You or your
spouse are an active Participant in a retirement Plan of an employer, your
deductible contributions may be limited. If You exceed purchase payment limits
You may be subject to a tax penalty.
Roth IRA Purchase Payments for individuals are non-deductible (made on an
"after tax" basis) and are limited to the lesser of 100% of compensation or the
annual deductible IRA amount. Individuals age 50 and older can make an
additional "catch-up" purchase payment each year (assuming the individual has
sufficient compensation). You may contribute up to the annual purchase payment
limit if your modified adjusted gross income does not exceed certain limits.
You can contribute to a Roth IRA after age 70 1/2. If You exceed purchase
payment limits, You may be subject to a tax penalty.
WITHDRAWALS
If and to the extent that Traditional IRA Purchase Payments are made on an
"after tax" basis, withdrawals would be included in income except for the
portion that represents a return of non-deductible Purchase Payments. This
portion is generally determined based upon the ratio of all non-deductible
Purchase Payments to the total value of all your Traditional IRAs (including
SEP IRAs and SIMPLE IRAs). We withhold a portion of the amount of your
withdrawal for income taxes, unless You elect otherwise. The amount we withhold
is determined by the Code.
Generally, withdrawal of earnings from Roth IRAs are free from federal
income tax if (1) they are made at least five taxable years after your first
purchase payment to a Roth IRA; and (2) they are made on or after the date You
reach age 59 1/2 and upon your death, disability or qualified first-home
purchase (up to $10,000). Withdrawals from a Roth IRA are made first from
Purchase Payments and then from earnings. We may be required to withhold a
portion of your withdrawal for income taxes, unless You elect otherwise. The
amount will be determined by the Code.
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CONVERSION
Traditional IRAs may be converted to Roth IRAs. Except to the extent You
have non-deductible contributions, the amount converted from an existing
Traditional IRA into a Roth IRA is taxable. Generally, the 10% federal income
tax penalty does not apply. However, the taxable amount to be converted must be
based on the fair market value of the entire annuity contract being converted
into a Roth IRA. Such fair market value, in general, is to be determined by
taking into account the value of all benefits (both living benefits and death
benefits) in addition to the Account Balance; as well as adding back certain
loads and charges incurred during the prior twelve month period. Your Contract
may include such benefits and applicable charges. Accordingly, if You are
considering such conversion of your annuity Contract, please consult your tax
adviser. The taxable amount may exceed the Account Balance at the date of
conversion.
A Roth IRA Contract may also be re-characterized as a Traditional IRA, if
certain conditions are met. Please consult your tax adviser.
DISTINCTION FOR PUERTO RICO CODE
An annuity Contract may be purchased by an employer for an employee under a
qualified pension, profit sharing, stock bonus, annuity, or a "cash or
deferred" arrangement Plan established pursuant to Section 1081.01 of the 2011
PR Code. To be tax qualified under the 2011 PR Code, a Plan must comply with
the requirements of Section 1081.0l(a) of the 2011 PR Code which includes
certain participation requirements, among other requirements. A trust created
to hold assets for a qualified Plan is exempt from tax on its investment income.
CONTRIBUTIONS
The employer is entitled to a current income tax deduction for contributions
made to a qualified Plan, subject to statutory limitations on the amount that
may be contributed each year. The Plan contributions by the employer are not
required to be included in the current income of the employee.
DISTRIBUTIONS
Any amount received or made available to the employee under the qualified
Plan is includible in the gross income of the employee in the taxable year in
which received or made available. In such case, the amount paid or contributed
by the employer shall not constitute consideration paid by the employee for the
Contract for purposes of determining the amount of Annuity Payments required to
be included in the employee's gross income. Thus, amounts actually distributed
or made available to any employee under the qualified Plan will be included in
their entirety in the employee's gross income. Lump-sum proceeds from a Puerto
Rico qualified retirement Plan due to separation from service will generally be
taxed at a 20% capital gain tax rate to be withheld at the source. A special
rate of 10% may apply instead, if the Plan satisfies the following requirements:
(1)the Plan's trust is organized under the laws of Puerto Rico, or has a
Puerto Rico resident trustee and uses such trustee as paying agent; and
(2)10% of all Plan's trust assets (calculated based on the average balance
of the investments of the trust) attributable to Participants who are
Puerto Rico residents must be invested in "property located in Puerto
Rico" for a three-year period.
If these two requirements are not satisfied, the distribution will generally
be subject to the 20% tax rate. The three-year period includes the year of the
distribution and the two immediately preceding years. In the case of a defined
contribution Plan that maintains separate accounts for each Participant, the
described 10% investment requirement may be satisfied in the accounts of a
Participant that chooses to invest in such fashion rather than at the trust
level. Property located in Puerto Rico includes shares of stock of a Puerto
Rico registered investment company, fixed or variable annuities issued by a
domestic insurance company or by a foreign insurance corporation that derives
more than 80% of its gross income from sources within Puerto Rico and bank
deposits. The PR 2011 Code does not impose a penalty tax in case of early
(premature) distributions from a qualified Plan.
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ROLLOVER
Deferral of the recognition of income continues upon the receipt of a
distribution by a Participant from a qualified Plan, if the distribution is
contributed to another qualified retirement Plan or traditional individual
retirement account for the employee's benefit no later than sixty (60) days
after the distribution.
ERISA CONSIDERATIONS
In the context of a Puerto Rico qualified retirement Plan trust, the IRS has
recently held that the transfer of assets and liabilities from a qualified
retirement Plan trust under the Code to that type of Plan would generally be
treated as a distribution includible in gross income for U.S. income tax
purposes even if the Puerto Rico retirement Plan is a Plan described in ERISA
Section 1022(i)(1). By contrast, a transfer from a qualified retirement Plan
trust under the Code to a Puerto Rico qualified retirement Plan trust that has
made an election under ERISA Section 1022(i)(2) is not treated as a
distribution from the transferor Plan for U.S. income tax purposes because a
Puerto Rico retirement Plan that has made an election under ERISA
Section 1022(i)(2) is treated as a qualified retirement Plan for purposes Code
Section 401(a). The IRS has determined that the above described rules
prescribing the inclusion in income of transfers of assets and liabilities to a
Puerto Rico retirement Plan trust described in ERISA Section 1022(i)(l) would
be applicable to transfers taking effect after December 31, 2012.
Similar to the IRS in Revenue Ruling 2013-17, the U.S. Department of Labor
issued DOL Technical Release No. 2013-04 on September 18, 2013, providing that,
where the Secretary of Labor has authority to regulate with respect to the
provisions of ERISA dealing with the use of the term "spouse", spouse will be
read to refer to any individuals who are lawfully married under any state law,
including same-sex spouses, and without regard to whether their state of
domicile recognizes same-sex marriage. Thus, for ERISA purposes as well as
federal tax purposes, an employee benefit Plan Participant who marries a person
of the same sex in a jurisdiction that recognizes same-sex marriage will
continue to be treated as married even if the couple moves to a jurisdiction,
like Puerto Rico, that does not recognize same-sex marriage.
ADDITIONAL FEDERAL TAX CONSIDERATIONS
NON-QUALIFIED ANNUITY CONTRACTS
CHANGES TO TAX RULES AND INTERPRETATIONS
Changes to applicable tax rules and interpretations can adversely affect the
tax treatment of your Contract. These changes may take effect retroactively.
We reserve the right to amend your Contract where necessary to maintain its
status as an annuity Contract under federal tax law and to protect You and
other Contract owners from adverse tax consequences.
THE 3.8 % INVESTMENT TAX applies to investment income earned in households
making at least $250,000
($200,000 single) and will result in the following top tax rates on investment
income:
CAPITAL GAINS DIVIDENDS OTHER
------------- --------- -----
23.8% 43.4% 43.4%
The table above also incorporates the scheduled increase in the capital
gains rate from 15% to 20%, and the scheduled increase in the dividends rate
from 15% to 39.6%.
QUALIFIED ANNUITY CONTRACTS
Annuity contracts purchased through tax qualified Plans are subject to
limitations imposed by the Code and regulations as a condition of tax
qualification. There are various types of tax qualified Plans which have
certain beneficial tax consequences for Contract owners and Plan Participants.
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TYPES OF QUALIFIED PLANS
The following list includes individual account-type Plans which may hold an
annuity Contract as described in the Prospectus. Except for Traditional IRAs,
they are established by an employer for participation of its employees.
IRA
Established by an individual, or employer as part of an employer Plan.
SEP
Established by a for-profit employer, based on IRA accounts for each
Participant. Employer only contributions.
401(K), 401(A)
Established by for-profit employers, Section 501(c)(3) tax exempt and
non-tax exempt entities, Indian Tribes.
403(B) TAX SHELTERED ANNUITY ("TSA")
Established by Section 501(c)(3) tax exempt entities, public schools (K-12),
public colleges, universities, churches, synagogues and mosques.
ROTH ACCOUNT
Individual or employee Plan contributions made to certain Plans on an
after-tax basis. An IRA may be established as a Roth IRA, and 401(k), 403(b)
and 457(b) Plans may provide for Roth accounts.
ERISA
If your Plan is subject to ERISA and You are married, the income payments,
withdrawal provisions, and methods of payment of the death benefit under your
Contract may be subject to your spouse's rights as described below.
Generally, the spouse must give qualified consent whenever You elect to:
(a)Choose income payments other than on a qualified joint and survivor
annuity basis ("QJSA") (one under which we make payments to You during
your lifetime and then make payments reduced by no more than 50% to your
spouse for his or her remaining life, if any): or choose to waive the
qualified pre-retirement survivor annuity benefit ("QPSA") (the benefit
payable to the surviving spouse of a Participant who dies with a vested
interest in an accrued retirement benefit under the Plan before payment
of the benefit has begun);
(b)Make certain withdrawals under Plans for which a qualified consent is
required;
(c)Name someone other than the spouse as your beneficiary; or
(d)Use your accrued benefit as security for a loan exceeding $5,000.
Generally, there is no limit to the number of your elections as long as a
qualified consent is given each time. The consent to waive the QJSA must meet
certain requirements, including that it be in writing, that it acknowledges the
identity of the designated beneficiary and the form of benefit selected, dated,
signed by your spouse, witnessed by a notary public or Plan representative, and
that it be in a form satisfactory to us. The waiver of the QJSA generally must
be executed during the 180 day period (90 days for certain loans) ending on the
date on which income payments are to commence, or the withdrawal or the loan is
to be made, as the case may be. If You die before benefits commence, your
surviving spouse will be your beneficiary unless he or she has given a
qualified consent otherwise.
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The qualified consent to waive the QPSA benefit and the beneficiary
designation must be made in writing that acknowledges the designated
beneficiary, dated, signed by your spouse, witnessed by a notary public or Plan
representative and in a form satisfactory to us. Generally, there is no limit
to the number of beneficiary designations as long as a qualified consent
accompanies each designation. The waiver of and the qualified consent for the
QPSA benefit generally may not be given until the Plan year in which You attain
age 35. The waiver period for the QPSA ends on the date of your death.
If the present value of your benefit is worth $5,000 or less, your Plan
generally may provide for distribution of your entire interest in a lump sum
without spousal consent.
Comparison of Plan Limits for Individual Contributions:
PLAN TYPE ELECTIVE CONTRIBUTION CATCH-UP CONTRIBUTION
--------- --------------------- ---------------------
IRA $5,500 $1,000
401(k) $17,500 $5,500
SEP/401(a) (Employer contributions only)
403(b) (TSA) $17,500 $5,500
Dollar limits are for 2014 and subject to cost-of-living adjustments in
future years. Employer-sponsored individual account Plans may provide for
additional employer contributions not to exceed the greater of $52,000 or 25%
of an employee's compensation for 2014.
FEDERAL ESTATE TAXES
While no attempt is being made to discuss the federal estate tax
implications of the Contract, You should bear 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 adviser 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.
ANNUITY PURCHASE PAYMENTS BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal
income tax consequences to annuity purchasers that are U.S. citizens or
residents. Purchasers that are not U.S. citizens or residents will generally be
subject to U.S. federal withholding tax on taxable distributions from annuity
contracts at a 30% rate, unless a lower treaty rate applies. In addition,
purchasers may be subject to state and/or municipal taxes and taxes that may be
imposed by the purchaser's country of citizenship or residence. Prospective
purchasers are advised to consult with a qualified tax adviser regarding U.S.,
state and foreign taxation with respect to an annuity contract purchase.
THIS SUPPLEMENT SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
1300 HALL BOULEVARD
BLOOMFIELD, CT 06002-2910 BOOKS 27 AND 28
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