REGISTRATION STATEMENT NO. 333-[o]
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
METLIFE INSURANCE COMPANY USA
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
06-0566090
(I.R.S. Employer Identification Number)
11225 NORTH COMMUNITY HOUSE ROAD, CHARLOTTE, NC 28277
(800) 989-3752
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
ERIC T. STEIGERWALT
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER
METLIFE INSURANCE COMPANY USA
11225 NORTH COMMUNITY HOUSE ROAD, CHARLOTTE, NC 28277
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPIES TO:
Diane E. Ambler, Esq.
K&L Gates LLP
1601 K Street, N.W.
Washington, D.C. 20006
AS SOON AS PRACTICABLE FOLLOWING THE EFFECTIVENESS OF THE REGISTRATION
STATEMENT
(Approximate date of commencement of proposed sale to the public)
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a registration statement pursuant to General Instruction I.D.
or a post-effective amendment thereto that shall become effective upon filing
with the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box. [ ]
If this Form is a post-effective amendment to a registration statement filed
pursuant to General Instruction I.D. filed to register additional securities or
additional classes of securities pursuant to Rule 413(b) under the Securities
Act, check the following box. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [X] (Do not check if a smaller reporting company) Smaller reporting company [ ]
CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE AMOUNT OF
OFFERING PRICE AGGREGATE
SECURITIES TO BE REGISTERED REGISTERED REGISTRATION FEE(2)
PER UNIT(1) OFFERING PRICE
Fixed Account Units with a Market
$10,000 Not applicable $10,000 $1.16
Value Adjustment Cash out Feature
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1.Interests are sold on a dollar for dollar basis and not on the basis of a
price per share or unit.
2.Pursuant to Rule 457(p) under the Securities Act of 1933, the filing fee is
offset by the filing fee previously paid in connection with the form S-3 (file
No. 333-191489, initially filed October 1, 2013, by Metropolitan Life
Insurance Company.)
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
T-MARK
PROSPECTUS
T-Mark Contracts are group or individual modified guaranteed annuities
("Contracts"), which provide 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:
o the Contract (single Purchase Payment)
o the MetLife Insurance Company USA and MetLife of CT Separate Account
MGA -- RISK (SEE PAGE 6)
o the Guarantee Periods and interest rates
o surrenders
o surrender charges
o Market Value Adjustment
o death benefit
o Annuity Payments
o other aspects of the Contract
This Contract is issued by MetLife Insurance Company USA (the "Company"). The
Company is located at11225 North Community House Road, Charlotte, NC 28277. The
telephone number is 1-800-343-8496. MetLife Investors Distribution Company,
1095 Avenue of the Americas, New York, NY 10036, 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 [ ], 2015
TABLE OF CONTENTS
PAGE
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Special Terms............................................. 3
Summary................................................... 5
When a Market Value Adjustment and Surrender Charges
Apply -- General........................................ 6
The Insurance Company -- Risk............................. 6
SEPARATE ACCOUNT.......................................... 6
The Contracts............................................. 7
Application and Purchase Payment........................ 7
Right to Cancel......................................... 7
Section 403(b) Plan Terminations........................ 7
Other Plan Terminations................................. 8
Section 403(b) Collateralized Loans..................... 8
Purchase Payments -- Section 403(b) Plan................ 8
Guarantee Periods......................................... 8
Establishment of Guaranteed Interest Rates................ 9
Surrenders................................................ 10
General................................................. 10
Surrender Charge........................................ 10
Market Value Adjustment................................. 10
Waiver of Surrender Charge.............................. 11
When The Market Value Adjustment Will Not Apply and
Surrender Charge Waived............................... 12
Premium Taxes........................................... 12
Restrictions on Financial Transactions.................. 12
Termination of the Contract............................. 12
Death Benefit............................................. 12
Total Control Account................................... 12
Annuity Period............................................ 13
PAGE
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Election of Annuity Commencement Date and Form of
Annuity............................................... 13
Misstatement............................................ 13
Change of Annuity Commencement Date or Annuity
Option................................................ 13
Annuity Options......................................... 13
Annuity Payment......................................... 14
Death of Annuitant After the Annuity Commencement
Date.................................................. 14
Investments by the Company................................ 15
Annual Statement.......................................... 15
Amendment of the Contracts................................ 15
Assignment of the Contracts............................... 15
Distribution of the Contracts............................. 15
Federal Tax Considerations................................ 17
Non-Qualified Annuity Contracts......................... 18
Qualified Annuity Contracts............................. 20
Additional Information Regarding TSA (ERISA and
non-ERISA) 403(b)..................................... 23
Additional Federal Tax Information...................... 26
Abandoned Property Requirements........................... 28
Information Incorporated by Reference..................... 28
Experts................................................... 29
Independent Registered Public Accounting Firm........... 29
Appendix A: Information Concerning Qualified Plans........ A-1
Appendix B: Market Value Adjustment....................... B-1
2
SPECIAL TERMS
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In this prospectus, the following terms have the indicated meanings:
ACCOUNT -- The Cash Value or Cash Surrender Value credited to a participant or
Owner.
ACCUMULATED VALUE -- The Purchase Payment plus all interest earned, minus all
surrenders, surrender charges and applicable Premium Tax previously deducted.
ANNUITANT -- A person on whose life the maturity date depends and Annuity
Payments are made.
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.
ANNUITY PAYMENTS -- A series of periodic payments (a) for life; (b) for life
with a minimum number of payments; (c) for the joint lifetime of the Annuitant
and another person, and thereafter during the lifetime of the survivor; or (d)
for a fixed period.
ANNUITY PERIOD -- The period during which Annuity Payments are made.
BENEFICIARY (IES) -- The person(s) or trustee designated to receive any
remaining contractual benefits in the event of a participant's, Annuitant's or
Contract Owner's death, as applicable.
CASH SURRENDER VALUE -- The Cash Value less any amounts deducted upon a
withdrawal or surrender, outstanding loans, if available under the Contract,
any applicable Premium Taxes or other surrender charges not previously
deducted.
CASH VALUE -- The Maturity Value of a Deposit on the maturity date or the
market adjusted value before the maturity date of that Deposit.
CODE -- The Internal Revenue Code of 1986, as amended, and all related laws and
regulations, which are in effect during the term of this Contract.
COMPANY (WE, US, OUR) -- MetLife Insurance Company USA.
CONTRACT -- For convenience, means the Contract or certificate, (if
applicable). For example, Contract Year also means certificate year.
CONTRACT DATE -- The date on which the Contract is issued. For certain group
Contracts, it is the date on which the Contract becomes effective, as shown on
the specifications page of the Contract.
CONTRACT OWNER -- The person named in the Contract (on the specifications
page). For certain group Contracts, the Contract Owner is the trustee or other
entity which owns the Contract.
CONTRACT YEAR -- A continuous twelve -month period beginning on the Contract
Date and each anniversary thereof. Contract Year also means certificate year.
DEPOSIT -- The premium payment applied to the Contract less Premium Taxes if
applicable.
DUE PROOF OF DEATH -- (a) A copy of a certified death certificate; (b) a copy
of a certified decree of a court of competent jurisdiction as to the finding of
death, (c) a written statement by a medical doctor who attended the deceased;
or (d) any other proof satisfactory to Us.
ERISA -- The Employee Retirement Income Security Act of 1974, as amended, and
all related laws and regulations which are in effect during the term of this
Contract.
FREE INTEREST -- The interest credited in the previous Contract Year which is
not subject to a surrender charge or a Market Value Adjustment.
GENERAL ACCOUNT -- The General Account of the Company.
GOOD ORDER -- A request or transaction generally is considered in "Good Order"
if it complies with Our administrative procedures and the required information
is complete and accurate. A request or transaction may be rejected or delayed
if not in Good Order. If You have any questions, You should contact Us or Your
sales representative before submitting the form or request.
GUARANTEE PERIOD -- The period for which either an initial or subsequent
Guaranteed Interest Rate is credited.
3
GUARANTEED INTEREST RATE -- The annual effective interest rate credited during
the Guarantee Period.
HOME OFFICE -- The principal executive offices of MetLife Insurance Company USA
located at 11225 North Community House Road, Charlotte, NC 28277. 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 -- 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.
PLAN -- The Plan or the arrangement used in a retirement plan or program
whereby the Purchase Payments and any gains are intended to qualify under
Sections 401, 403(b) or 457 of the Code.
PREMIUM TAX -- The amount of tax, if any, charged by the state or municipality.
Generally, We will deduct any applicable Premium Tax from the Cash Value either
upon surrender, annuitization, death, or at the time a Purchase Payment is
made, but no earlier than when We have the liability under state law.
PURCHASE PAYMENTS -- The premium payments applied to the Contract less any
Premium Taxes if applicable.
QUALIFIED CONTRACT -- A Contract used in a retirement Plan or program that is
intended to qualify under Sections 401, 403, 408, 414(d) or 457 of the Code.
SEPARATE ACCOUNT MGA -- This separate account is MetLife of CT Separate Account
MGA.
YOU, YOUR -- "You", depending on the context, may be the participant or the
Contract Owner and a natural person, a trust established for the benefit of a
natural person, a charitable remainder trust, or a Plan (or the employer
purchaser who has purchased the Contract on behalf of the Plan). In connection
with a 403(b) plan termination, as of the date of the Contract or cash
distribution under such plan termination, "You" means the participant who has
received such Contract or cash distribution.
4
SUMMARY
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MetLife Insurance Company USA (the "Company," "We," "Us"), a wholly-owned
subsidiary of MetLife, Inc., is offering group and individual modified
guaranteed annuity Contracts to eligible individuals. If a group Contract is
purchased, We issue certificates to the individual participants. Where We refer
to "You," We are referring to the individual Contract Owner or to the group
participant, as applicable. For convenience, this prospectus refers to
Contracts and certificates as "Contracts." 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 (if applicable).
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 seven
days 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 will be assessed as a percentage of the Cash
Value withdrawn as follows:
YEARS SINCE SURRENDER
DEPOSIT MADE CHARGE
-------------- ----------
0-1 7%
2 6%
3 5%
4 4%
5 3%
6 or more 0%
The surrender charges listed above apply to full or partial surrenders,
regardless of the length of the Guarantee Period selected. The surrender charge
will apply if a surrender occurs at the expiration date of the Guarantee Period
for Deposits in the Contract less than five years.
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. You may call or write Us to make
such a request. 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.") If Free Interest is not
taken within 30 days before the Guarantee Period ends, then such amount becomes
part of the Account.
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.
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".)
If a participant under a group Contract or an Annuitant under an individual
Contract dies before the Annuity Commencement Date, We will pay a death benefit
to the Beneficiary. This death benefit equals (a) the greater of the Cash Value
or the Accumulated Value of the Contract if death occurs before age 65 or (b)
the Cash Value of the Contract if death occurs on or after age 65, less any
applicable Premium Tax.
5
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".)
WHEN A MARKET VALUE ADJUSTMENT AND SURRENDER CHARGES APPLY -- GENERAL
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Your Contract is a single Purchase Payment modified guaranteed annuity that
offers a guaranteed fixed rate of return on Your principal investment if You do
not make a partial or full surrender of Your Contract before the Guarantee
Period ends. Free Interest may be withdrawn without a Market Value Adjustment
or a surrender charge. However, generally, if you do make a partial or full
surrender of Your Contract value before the end of the Guarantee Period, Your
Contract value is subject to both a Market Value Adjustment and a surrender
charge. If Your Contract value is subject to both a Market Value Adjustment and
a surrender charge, the Market Value Adjustment will be applied first. A
surrender charge will generally apply if you make a partial or full surrender
of Your Contract. A surrender charge will not be applied to surrenders that
occur after the end of the fifth year since application of Your Purchase
Payment. (See "Surrenders.")
THE INSURANCE COMPANY -- RISK
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MetLife Insurance Company USA is a stock life insurance company originally
chartered in Connecticut in 1863 and currently subject to the laws of the State
of Delaware. The Company was previously known as MetLife Insurance Company of
Connecticut but changed its name to MetLife Insurance Company USA when it
changed its state of domicile from Connecticut to Delaware on November 14,
2014. The Company is licensed to conduct business in all states of the United
States, except New York, and in 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 financial services to individuals and institutional customers.
The Company's Home Office is located at 11225 North Community House Road,
Charlotte, NC 28277. The office that administers Your Contract is located at
4700 Westown Parkway, Ste. 200, West Des Moines, Iowa 50266.
SEPARATE ACCOUNT
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Purchase Payments made to this Contract are invested in the MetLife of CT
Separate Account MGA. We have exclusive and absolute ownership and control of
the assets of the separate account. It is a non-unitized separate account. You
do not share in the investment performance of assets allocated to the separate
account. The obligations under this Contract are independent of the investment
performance of the separate account and are Our obligations.
The separate account's assets are solely for the benefit of those who invest in
the separate account and no one else, including Our creditors. The assets of
the separate account are held in Our name on behalf of the separate account and
legally belong to Us. All the income, gains and losses (realized or unrealized)
resulting from these assets are credited to or charged against the Contracts
issued from the separate account without regard to Our other business.
We are obligated to pay all money We owe under the Contracts -- such as death
benefits and income payments -- even if that amount exceeds the assets in the
separate account. Any such amount that exceeds the assets in the separate
account is paid from Our General Account. Amounts paid from the General Account
are subject to the financial strength and claims paying ability of the Company
and Our long term ability to make such payments and are not guaranteed by any
other party. We issue other annuity contracts and life insurance policies where
We pay all money We owe under those contracts and policies from Our General
Account. The Company is regulated as an insurance company under state law,
which includes, generally, limits on the amount and type of investments in its
General Account. However, there is no guarantee that We will be able to meet
Our claims paying obligations; there are risks to purchasing any insurance
product. You may surrender Your Contract at any time, subject to certain tax
law and retirement Plan restrictions, but the Cash Value may be subject to a
surrender charge and/or a Market Value Adjustment calculation that may increase
or decrease the amount payable upon surrender.
6
THE CONTRACTS
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APPLICATION AND PURCHASE PAYMENT
For the Company to issue a Contract to You, You must:
o Complete an application or an order to purchase
o Include Your minimum Purchase Payment of at least $5,000 and
o Submit both to Our Home Office for approval.
The Company may:
o Accept Purchase Payments up to $1 million within a 12 month period
without prior approval;
o Contact You or Your agent if the application or order form is not
properly completed; and
o 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.
RIGHT TO CANCEL
You may return Your Contract to Us at Our Home Office within 10 days of Your
original Purchase Payment in most states. Refer to Your Contract for any
state-specific information.
NON-NATURAL PERSONS AS OWNERS OR BENEFICIARIES. If a non-natural person, such
as a trust, is the Owner of a non-Qualified Contract, the distribution on death
rules under the Internal Revenue Code may require payment to begin earlier than
expected and may impact the usefulness of the living (if any) and/or death
benefits. Naming a non-natural person, such as a trust or estate, as a
Beneficiary under the Contract will generally eliminate the beneficiary's
ability to "stretch" or a spousal Beneficiary's ability to continue the
Contract and the living (if any) and/or death benefits.
SECTION 403(B) PLAN TERMINATIONS
Upon a Section 403(b) plan termination, Your employer is required to distribute
Your Plan benefits under the Contract to You. Your employer may permit You to
receive Your distribution of Your 403(b) plan benefit in cash or in the form of
the Contract.
If You elect to receive Your distributions in cash, the distribution is a
withdrawal under the Contract and any amounts withdrawn are subject to
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.") A Market Value Adjustment and Contract surrender charges will
be waived if the net distribution is made under the exceptions listed in the
"Waiver of Surrender Charge" section of the prospectus. However, if Your
employer chooses to distribute cash as the default option, 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.
If You receive the distribution in the form of the Contract. We will continue
to administer the Contract according to its terms. However in that case, You
may not make any additional Purchase Payments or take any loans. In addition
the Company will rely on You to provide certain information that would
otherwise be provided to the Company by the employer or Plan Administrator. The
employer may choose distribution of the Contract as the default option. The
employer may not choose distribution of a Contract as a default option when
that Contract is an investment vehicle for a TSA ERISA plan.
7
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.
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 Cash 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.
PURCHASE PAYMENTS -- SECTION 403(B) PLAN
The Internal Revenue Service ("IRS") announced regulations affecting Section
403(b) Plans and arrangements which are generally effective January 1, 2009. As
part of these regulations, employers need to meet certain requirements in order
for their employees' Annuity contracts that fund these programs to retain a tax
deferred status under Section 403(b). Prior to the new rules, transfers of one
Annuity contract to another would not result in a loss of tax deferred status
under Section 403(b) under certain conditions (so-called "90-24 transfers").
The new regulations have the following effect regarding transfers: (1) a newly
issued contract funded by a transfer which is completed after September 24,
2007, is subject to the employer requirements referred to above; (2) additional
Purchase Payments made after September 24, 2007, to a contract that was funded
by a 90-24 transfer on or before September 24, 2007, may subject the contract
to this employer requirement.
In consideration of these regulations, We have determined to only make
available the Contract/Certificate for purchase (including transfers) where
Your employer currently permits salary reduction contributions to be made to
the Contract/Certificate.
If Your Contract/Certificate was issued previously as a result of a 90-24
transfer completed on or before September 24, 2007, and You have never made
salary reduction contributions into Your Contract/Certificate, We urge You to
consult with Your tax advisor prior to making additional Purchase Payments.
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
Beginning Account value: $50,000
8
Guarantee Period: 5 years
Guaranteed Interest Rate: 5.50% Annual Effective Rate
END OF CONTRACT YEAR
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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 (1 + Guaranteed Interest Rate) 1.055
---------- ----------
$55,651.25
========== ==========
Account value at end of Contract Year 2 $55,651.25
X (1 + 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 $65,348.00
========== ========== ========== ========== ==========
(i.e. Maturity Value)
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:
o You may elect a subsequent Guarantee Period by telephone or in writing
o Your Account value will be transferred to the new Guarantee Period at
the Guaranteed Interest Rate offered at that time
o If You do not make any election, We will automatically transfer the
Account values into a seven day Guarantee Period, which You may transfer
out of into a new Guarantee Period with no transfer, surrender or Market
Value Adjustment charge.
If You make a withdrawal at the end of a Guarantee Period, You may be subject
to a surrender charge.
In no event may subsequent Guarantee Periods extend beyond the Annuity
Commencement Date then in effect.
ESTABLISHMENT OF GUARANTEED INTEREST RATES
--------------------------------------------------------------------------------
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:
o Your Account value as of the end of the preceding year
9
o all transactions regarding Your Contract during the year
o Your Account value at the end of the current year
o 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
--------------------------------------------------------------------------------
GENERAL
You may make a full or partial surrender at any time, subject to certain tax
law and retirement Plan restrictions, and 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.")
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.")
We may withhold payment of Cash Surrender Value or a participant's loan
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 fifth year since Your Purchase Payment
was made. The surrender charge is computed as a percentage of the Cash Value
being surrendered.
CHARGE AS A
YEARS SINCE PERCENTAGE OF CASH
DEPOSIT WAS MADE VALUE
------------------ -------------------
1 or less 7%
2 6%
3 5%
4 4%
5 3%
Thereafter 0%
The surrender charges listed above will apply to full or partial surrenders,
regardless of the length of the Guarantee Period selected. For example, assume
a Guarantee Period of four years. IN THIS CASE, ANY SURRENDERS MADE DURING THE
FOURTH YEAR, EVEN ON THE MATURITY DATE, WILL BE SUBJECT TO A 4% SURRENDER
CHARGE.
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.
10
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 less than 0.50 percent higher
(0.25 percent higher in New York State) 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 is more than 0.50
percent higher (0.25 percent higher in New York State) 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.
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:
o an annuity payout is begun
o a level income option of at least three years' duration is begun after
the first certificate Year or Contract Year, as applicable
o the participant of a group Contract, or Annuitant of an individual
Contract becomes disabled (as defined by the Internal Revenue Service
("IRS")) subsequent to purchase of the certificate or Contract
o the participant of a group Contract, or Annuitant of an individual
Contract dies
o the participant of a group Contract, or Annuitant of an individual
Contract under a tax deferred annuity plan (403(b) Plan) retires after
age 55, provided the certificate or Contract has been in effect five
years or more and the proceeds are paid by check made payable to the
Owner of the group Contract
o the participant of a group Contract, or Annuitant of an individual
Contract under an individual retirement annuity plan reaches age 70 1/2,
provided the certificate or Contract, as applicable, has been in effect
five years or more
o the participant of a group Contract, or Annuitant of an individual
Contract under a qualified pension or profit-sharing Plan, including a
401(k) Plan, retires at or after age 59 1/2, provided the certificate or
Contract, as applicable, has been in effect five years or more; or if
refunds are made to satisfy the anti-discrimination test; (for
participants or Annuitants under contracts issued before May 1, 1992,
the surrender charge will also be waived if he or she retires at normal
retirement age (as defined by the Plan), provided the certificate or
Contract has been in effect one year or more)
o the participant of a group Contract, or Annuitant of an individual
Contract under a Section 457 deferred compensation Plan retires and the
certificate or Contract has been in effect five years or more, or if a
financial hardship or disability withdrawal has been allowed by the Plan
administrator under applicable IRS rules
o for 403(b) arrangements, 401(k) Plans, 401(a) Plans, Section 457
deferred compensation Plans and 403(a) arrangements, direct transfers to
another funding vehicle or Annuity contract issued by Us or by one of
Our affiliates and We agree.
In addition, for individuals under a 403(b) annuity, a pension or
profit-sharing Plan, or a Section 457 deferred compensation Plan, there is a
10% free withdrawal allowance for partial surrenders prior to the Annuity
Commencement Date. An individual under an individual retirement annuity plan
who is over age 59 1/2 has a 20% free withdrawal allowance. This means that,
each certificate or Contract Year after the first such year, for the first
partial surrender made in that year, 10% (20% for individual retirement annuity
plans) of his or her Cash Value may be withdrawn without a surrender charge.
All Cash Values, including the 10% free withdrawal allowance (20% for
individual retirement annuity plans), withdrawn will reflect any applicable
Market Value Adjustment. Full surrenders
11
are not eligible for the free withdrawal allowance. Failure to use all or part
of the free withdrawal allowance in any certificate or Contract Year forfeits
the balance of the allowance for that year. For 403(b) Plan participants,
partial and full surrenders may be subject to restrictions. (See "Federal Tax
Considerations.")
WHEN THE MARKET VALUE ADJUSTMENT WILL NOT APPLY AND SURRENDER CHARGE WAIVED
We will not assess the Market Value Adjustment or surrender charge on required
minimum distributions from Qualified Contracts in order to satisfy federal
income tax rules or withdrawals to avoid required Federal income tax penalties.
This exception only applies to amounts required to be distributed from this
Contract.
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 may 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
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.
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.
DEATH BENEFIT
--------------------------------------------------------------------------------
If a participant under a group Contract, or an Annuitant under an individual
Contract dies before his or her Annuity Commencement Date, the death benefit
payable to the Beneficiary will equal (a) the greater of the Cash Value or the
Accumulated Value of the Contract, if death occurs before age 65; or (b) the
Cash Value of the Contract, if death occurs on or after age 65 less any
applicable Premium Tax. No Market Value Adjustment is made upon the payment of
a death benefit.
A qualified group Contract issued in connection with a qualified Plan, except
for group 403(b) annuity Contracts, will not provide a death benefit on those
Accounts held by individual participants.
The death benefit is calculated at the close of the business day on which the
Company's Home Office receives Due Proof of Death and written payment
instructions in Good Order.
We will pay the proceeds in one sum, including either by check, by placing the
amount in an account that earns interest, or by any other method of payment
that provides the Beneficiary with immediate and full access to the proceeds,
or under other settlement options that We may make available.
TOTAL CONTROL ACCOUNT
If Your Contract was issued in connection with a 403(b) Plan, Your Beneficiary
may elect to have the Contract's death benefit proceeds paid through a
settlement option called the Total Control Account. The Total Control Account
is an interest-bearing account through which the Beneficiary has immediate and
full access to the proceeds, with unlimited draft writing privileges. We credit
interest to the account at a rate that will not be less than a guaranteed
minimum annual effective rate.
12
Assets backing the Total Control Accounts are maintained in Our General Account
and are subject to the claims of Our creditors. We will bear the investment
experience of such assets; however, regardless of the investment experience of
such assets, the interest credited to the Total Control Account will never fall
below the applicable guaranteed minimum annual effective rate. Because We bear
the investment experience of the assets backing the Total Control Account, We
may receive a profit from these assets. The Total Control Account is not
insured by the FDIC or any other governmental agency.
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. If no date is elected, for non-Qualified Contracts, the automatic
default age is 75 (or ten years after the date of purchase, if later). For
Qualified Contracts, the automatic default age is 70. 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.
(These requirements may be changed by Us.) 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 no option is elected and You do not have a spouse on the Annuity
Commencement Date, 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. If You do have a spouse, the Cash Value will be applied to
option 4, to provide a Joint and Last Survivor Life Annuity.
MISSTATEMENT
We may require proof of age or, where not prohibited by state law, sex of the
Contract Owner, Beneficiary or Annuitant before making any payments under this
Contract that are measured by the Contract Owner's, Beneficiary's or
Annuitant's life. If the age or, where not prohibited by state law, sex of the
measuring life has been misstated, the amount payable will be the amount that
would have been provided at the correct age or, where not prohibited by state
law, sex.
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 $5,000 unless We consent to a
smaller amount. Where required by state law or under a qualified retirement
plan, the Annuitant's sex will not be taken into account in calculating Annuity
Payments. Annuity rates will not be less than the rates guaranteed by the
Contract at the time of purchase. Due to underwriting, administrative or Code
considerations, the choice of percentage reduction and/or the duration of the
Guarantee Period may be limited.
Your income payment amount will depend upon Your choices. For lifetime options,
the age and sex (where permitted) of the measuring lives (Annuitants) will also
be considered. For example, if You Select an annuity option guaranteeing
payments for Your lifetime and Your spouse's lifetime, Your payments will
typically be lower than if You select an annuity option with payments over only
Your lifetime. Annuity options that guarantee that payments will be made for a
13
certain number of years regardless of whether the Annuitant or joint Annuitant
is alive (such as Options 2, as defined below) result in payments that are
smaller than with without such a guarantee (such as Option 1 or Option 4, as
defined below). In addition, to the extent the annuity options have a guarantee
period, choosing a shorter guarantee period will result in each payment being
larger.
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 Fixed Period Without Life Contingency. We will make
monthly payments for the period selected. 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 -- Other Annuity Options: An annuity payable as is mutually agreed
upon by the Company and the Annuitant or Owner, as provided in the Plan, if
any.
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 non-Qualified 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 non-Qualified 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 Progressive Annuitant
Table (assuming births in the year 1900) with age set back two years and a net
investment rate of 3.5% per annum. If mortality appears more favorable and
interest rates so justify, at Our discretion, We may apply other tables that
will result in higher payments for each $1,000 applied under one or more of the
first four annuity options.
ANNUITY PAYMENT
The first payment under any annuity option will be made on 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.
14
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 the Contracts are invested in Separate Account MGA, a non-unitized
separate account 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 Separate Account MGA. The
obligations under the Contract are independent of the investment performance of
Separate Account MGA 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:
o Your Cash Value as of the end of the preceding year;
o all transactions regarding Your Contract during the year;
o Your Cash Value at the end of the current year; and
o 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. An assignment will not be binding upon Us until We receive
notice from You in writing. Ownership of Contracts issued in connection with
Section 401(a), 401(k), 403(c), 403(b), 408, 414(d) or 457 plans may not
generally be assigned. 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.
DISTRIBUTION OF THE CONTRACTS
--------------------------------------------------------------------------------
MetLife Investors Distribution Company ("MLIDC") is the principal underwriter
and distributor of the securities offered through this prospectus. MLIDC, which
is Our affiliate, also acts as the principal underwriter and distributor of
some of the other annuity contracts and variable annuity contracts and variable
life insurance policies We and Our affiliated companies issue. We reimburse
MLIDC for expenses MLIDC incurs in distributing the Contracts (e.g. commissions
payable to the retail broker-dealers who sell the Contracts, including Our
affiliated broker dealers.) MLIDC does not retain any fees under the Contracts.
We also pay amounts to MLIDC that may be used for its operating and other
expenses, including the following sales expenses: compensation and bonuses for
MLIDC's management team,
15
advertising expenses, and other expenses of distributing the Contracts. MLIDC's
management team also may be eligible for non-cash compensation items that we
may provide jointly with MLIDC. Non-cash items include conferences, seminars
and trips (including travel, lodging and meals in connection therewith),
entertainment, merchandise and other similar items.
MLIDC's principal executive offices are located at 1095 Avenue of the Americas,
New York, NY 10036. 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"). FINRA provides
background information about broker-dealers and their registered
representatives through FINRA BrokerCheck. You may contact the FINRA
BrokerCheck Hotline at 1-800-289-9999, or log on to www.finra.org. An investor
brochure that includes information describing FINRA BrokerCheck is available
through the Hotline or on-line.
The Contracts are sold through Our licensed sales representatives who are
associated with Our affiliated broker dealer MetLife Securities, lnc. ("MSI"),
which is paid compensation for the promotion and sale of the Contracts. MSI is
registered with the SEC as a broker-dealer under the Securities Exchange Act of
1934 and is also a member of FlNRA. The Contracts may also be sold through
other registered broker-dealers. The Contracts may also be sold through the
mail, the Internet or by telephone.
There is no front-end sales load deducted from Purchase Payments to pay sales
commissions. Our sales representatives must meet a minimum level of sales
production, in order to maintain their agent status with Us. Sales
representatives can meet the minimum level of sales production through sales of
proprietary and/or non-proprietary products. (Proprietary products are those
issued by Us or Our affiliates.) However, sales representatives can meet a
lower alternative minimum level of sales production if the sales representative
focuses on sales of proprietary products. Therefore, a sales representative may
have an incentive to favor the sale of proprietary products. Moreover, because
the managers who supervise the representatives receive a higher level of
compensation based on sales of proprietary products, these sales managers have
an incentive to promote the sale of proprietary products.
Our sales representatives receive cash payments for the products they sell and
service based upon a 'gross dealer concession' model. With respect to the
Contracts, the maximum gross dealer concession is 7% of the Purchase Payment.
Some sales representatives may elect to receive a lower gross dealer concession
when a Purchase Payment is made, along with a trail gross dealer concession of
up to 1% of the Account Value each year the Contract is in force for servicing
the Contract. A gross dealer concession may also be credited when the Contract
is annuitized. The amount of gross dealer concession credited upon
annuitization depends on several factors, including the number of years the
Contract has been in force.
A sales representative is entitled to part or all of the gross dealer
concession. The percentage to which the representative is entitled is
determined by a sliding-scale formula that takes into account the total amount
of proprietary and non-proprietary products sold and serviced by the
representative.
Our sales representatives and their managers may be eligible for additional
cash compensation, such as bonuses and expense allowances that may be tied to
sales of specific products), equity awards (such as stock options), training
allowances, supplemental compensation, product level add-ons controlled at the
local and company levels, financing arrangements, special loan repayment
options, marketing support, medical and other insurance benefits, and
retirement benefits and other benefits. Since some of this is additional
compensation, in particular, life insurance, disability and retirement benefits
is based primarily on the amount of proprietary products sold, Our sales
representatives and their managers have an incentive to favor the sale of
proprietary products. Sales representatives who meet certain productivity,
persistency, and length of service standards and/or their managers may be
eligible for additional cash compensation. Moreover, managers may be eligible
for additional cash compensation based on the sales production of the sales
representatives that the manager supervises. The business unit responsible for
the operation of Our distribution system is also eligible to receive an amount
of compensation.
Our sales representatives and their managers may be eligible for non-cash
compensation incentives, such as conferences, trips, prizes and awards. Other
non-cash compensation payments may be made for other services that are not
directly related to the sale of products. These payments may include support
services in the form of recruitment and training of personnel, production of
promotional services and other support services.
MLIDC may also pay compensation for the sale of Contracts by unaffiliated
broker-dealers. The compensation paid to unaffiliated broker-dealers for sales
of the Contracts is generally not expected to exceed, on a present value basis,
the aggregate amount of total compensation that is paid with respect to sales
made through Our representatives. (The total
16
compensation includes payments that We make to Our business unit that is
responsible for the operation of the distribution systems through which the
Contracts are sold.) Broker-dealers pay their sales representatives all or a
portion of the commissions received for their sales of the Contracts. Some
firms may retain a portion of commissions. The amount that the broker-dealer
passes on to its sales representatives is determined in accordance with its
internal compensation programs. Those programs may also include other types of
cash and non-cash compensation and other benefits. Sales representatives of
these selling firms may also receive non-cash compensation pursuant to their
firm's guidelines, directly from Us or the distributor. We and Our affiliates
may also provide sales support in the form of training, sponsoring conferences,
defraying expenses at vendor meetings, providing promotional literature and
similar services. An unaffiliated broker-dealer or sales representative of an
unaffiliated broker-dealer 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. Ask Your sales
representative further information about what Your sales representative and the
broker-dealer for which he or she works may receive in connection with Your
purchase of a Contract.
From time to time, We pay organizations, associations and non-profit
organizations fees to sponsor Our variable annuity contracts. We may also
obtain access to an organization's members to market Our variable annuity
contracts. These organizations are compensated for their sponsorship of Our
variable annuity contracts in various ways. Primarily, they receive a flat fee
from Us. We also compensate these organizations by funding oftheir programs,
scholarships, events or awards, such as a principal of the year award. We may
also lease their office space or pay fees for display space at their events,
purchase advertisements in their publications or reimburse or defray their
expenses. In some cases, We hire organizations to perform administrative
services for Us, for which they are paid a fee based upon a percentage of the
account balances their members hold in the Contract. We also may retain finders
and consultants to introduce Us to potential clients and for establishing and
maintaining relationships between Us and various organizations. The finders and
consultants are primarily paid flat fees and may be reimbursed for their
expenses. We or Our affiliates may also pay duly licensed individuals
associated with these organizations cash compensation for the sales of the
Contracts.
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.
17
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.
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 withdrawals 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.
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).
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.
18
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.
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 pro-rated 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.
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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 401(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 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 457(b)
governmental plans. Extensive special 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.
20
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.
If You meet certain requirements, your Roth IRA, Roth 403(b) and Roth 401(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.
21
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.
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.
22
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 your employer.
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) . 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.
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
23
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:
1. Related to purchase payments made prior to 1989 and pre-1989 earnings
on those purchase payments;
2. Is exchanged to another permissible investment under your 403(b) plan;
3. Relates to contributions to an annuity contract that are not salary
reduction elective deferrals, if your plan allows it;
4. Occurs after You die, leave your job or become disabled (as defined by
the Code);
5. Is for financial hardship (but only to the extent of elective
deferrals), if your plan allows it;
6. Relates to distributions attributable to certain TSA plan
terminations, if the conditions of the Code are met;
7. Relates to rollover or after-tax contributions; or
8. 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.
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
24
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 1081.01(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 (RIC), fixed or variable annuities issued by
a domestic insurance company or by a foreign insurance company 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 cases of early
(premature) distributions from a qualified plan.
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.
25
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)(1) would be applicable
to transfers taking effect after December 31, 2012.
Similar to the IRS 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 INFORMATION
NON-QUALIFIED ANNUITY CONTRACTS
DIVERSIFICATION
In order for your non-qualified Contract to be considered an annuity contract
for Federal income tax purposes, we must comply with certain diversification
standards with respect to the investments underlying the Contract. We believe
that we satisfy and will continue to satisfy these diversification standards.
Failure to meet these standards would result in immediate taxation to Contract
owners of gains under their Contracts. Inadvertent failure to meet these
standards may be correctable.
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 a Variable Annuity Contract under Federal tax law and to protect You
and other Contract owners in the Investment Divisions 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.
TYPES OF QUALIFIED PLANS
26
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.
403(a)
If your benefit under the 403(b) plan is worth more than $5,000, the Code
requires that your annuity protect your spouse if You die before You receive
any payments under the annuity or if You die while payments are being made. You
may waive these requirements with the written consent of your spouse. In
general, designating a beneficiary other than your spouse is considered a
waiver and requires your spouse's written consent. Waiving these requirements
may cause your monthly benefit to increase during your lifetime. Special rules
apply to the withdrawal of excess contributions.
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:
1. 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);
2. Make certain withdrawals under plans for which a qualified consent is
required;
3. Name someone other than the spouse as your beneficiary; or
4. 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 days 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.
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.
27
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 (other than 457(b) 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.
ABANDONED PROPERTY REQUIREMENTS
--------------------------------------------------------------------------------
Every state has unclaimed property laws that generally declare non-ERISA
("Employee Retirement Income Security Act of 1974") annuity contracts to be
abandoned after a period of inactivity of three to five years from the
contract's Maturity Date or the date the death benefit is due and payable. For
example, if the payment of a death benefit has been triggered, but, if after a
thorough search, we are still unable to locate the Beneficiary of the death
benefit, or the Beneficiary does not come forward to claim the death benefit in
a timely manner, the death benefit will be paid to the abandoned property
division or unclaimed property office of the state in which the Beneficiary or
you last resided, as shown on our books and records, or to our state of
domicile. (Escheatment is the formal, legal name for this process.) However,
the state is obligated to pay the death benefit (without interest) if your
Beneficiary steps forward to claim it with the proper documentation. To prevent
your Contract's proceeds from being paid to the state abandoned or unclaimed
property office, it is important that you update your Beneficiary designations,
including addresses, if and as they change. Please call 1-800-343-8496 to make
such changes.
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
28
with the SEC on [ ] via EDGAR File No. [ ]. The Form 10-K contains information
for the period ended December 31, [ ], about the Company, including
consolidated audited financial statements for the Company's latest fiscal year.
The Form 10-K is incorporated by reference into this prospectus.In addition,
all documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended
("Exchange Act") prior to the termination of the offering, 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 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, 11225 North
Community House Road, Charlotte, NC, 28277. The telephone number
1-800-343-8496. You may also access the incorporated reports and other
documents at www.metlife.com.
The Company files periodic reports as required under the Exchange Act
(including Form 10-K, 10-Q and 8-K). 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 1-800-SEC-0330.
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.
[To Be Updated By Amendment]
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
Delaware law and the validity of the forms of the Contracts under Delaware law
have been passed on by legal counsel for the Company.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The consolidated financial statements, and the related financial statement
schedules, incorporated by reference in this Registration Statement from the
MetLife Insurance Company USA and subsidiaries' (the "Company's") Annual Report
on Form 10-K for the year ended December 31, [ ], have been audited by , an
independent registered public accounting firm, as stated in their report ,
which is incorporated herein by reference. Such consolidated financial
statements and financial statement schedules have been so incorporated in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
The principal business address of [ ] is [ ].
[To Be Updated By Amendment]
29
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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 Code, Section 403(b) Plans, and eligible
state deferred compensation Plans under Section 457 of the Code ("Qualified
Plans"). Trustees should consider whether the Plan permits the investment of
Plan assets in the Contract, the distribution of such an Annuity and payment of
death benefits in accordance with the requirements of the federal income tax
rules. Assuming continued Plan qualification and operation, earnings on Plan
assets will accumulate value on a tax deferred basis even if the Plan is not
funded by this Contract. Trustees therefore should consider features of the
Contract other than tax deferral before investing in the Contract. In addition,
because required minimum distributions must generally begin for Participants
after age 70 1/2, (or, if later, when the Participant retires from employment
with the employer maintaining the Plan, provided the Plan permits and the
Participant is not a 5% or more Owner), trustees should consider whether the
Contract may be an appropriate purchase for Participants approaching or over
age 70 1 1/2.
To apply for this 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 certificates may or may not be issued, each Purchase Payment
is confirmed to the Contract Owner. 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"). Cash 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]
Market Adjusted Value = (Maturity Value) x 1
-------------------------
[ ]
(1 + iC + .005*) (t/365)
o where: "FI" is the interest credited in the previous Contract Year
(which is not subject to a surrender charge or a Market Value
Adjustment), "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.
* In New York State, .0025.
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
Purchase Payment: $50,000.00
Guarantee Period: 5 years
Guaranteed Interest Rate: 5.50% Effective Annual Rate
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:
1
------------------
$46,381.63 = ($61,941.23) x
[ ]
(1 + .07 + .005)4
B-1
Total amount available, prior to charges and Premium Taxes:
$49,131.63 = $46,381.63 + $2,750.00
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:
1
--------------------
$52,947.62 = $61,941.23) x
[ ]
(1 + .035 + 0.005)4
Total amount available, prior to charges and Premium Taxes:
$55,697.62 = $52,947.62 + $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
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized list of the estimated expenses to be incurred in
the connection with the securities being offered:
Accountant's Fees and Expenses: $6,800
Legal Fees and Expenses: $2,400
Printing Expenses: $200
Registration Fee: $1.16
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS [TO BE UPDATED BY
AMENDMENT.]
As described in their respective governing documents, MetLife, Inc. (the
ultimate parent of the Registrant and MetLife Investors Distribution Company,
the Registrant's underwriter (the "Underwriter")) and the Registrant, each of
which is incorporated in the state of Delaware, shall indemnify any person who
is made or is threatened to be made a party to any civil or criminal suit, or
any administrative or investigative proceeding, by reason of that person's
service as a director, officer, or agent of the respective company, under
certain circumstances, against liabilities and expenses incurred by such
person.
MetLife, Inc. also maintains a Directors and Officers Liability and Corporate
Reimbursement Insurance Policy under which the Registrant and the Underwriter,
as well as certain other subsidiaries of MetLife, are covered. MetLife, Inc.
also has secured a Financial Institutions Bond.
RULE 484 UNDERTAKING
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
ITEM 16. EXHIBITS
(A) Exhibits
EXHIBIT
NUMBER DESCRIPTION
------ -----------
1. Distribution and Principal Underwriting Agreement.
(Incorporated herein by reference to Exhibit 1 to the
Registration Statement on Form S-2, File No. 333-51804
filed December 14, 2000.)
1(a). Distribution and Principal Underwriting Agreement between
MetLife Insurance Company of Connecticut and MetLife
Investors Distribution Company (incorporated herein by
reference to Exhibit 3(i)(a) to the Registration
Statement on Form N-4, File Nos. 333-200231/811-03365
filed April 8, 2009.)
2. Agreement and Plan of Merger dated as of October 20,
2006. (Incorporated herein by reference to Exhibit 1(a)
to the Registration Statement on Form S-1, File No. 333-
138472 filed on November 7, 2006.)
2(b). Resolution of Board of Directors of MetLife Insurance
Company of Connecticut (including Agreement and Plan of
Merger). (Incorporated herein by reference to
EXHIBIT
NUMBER DESCRIPTION
------ -----------
Exhibit 1(b) to the Registration Statement on Form S-1,
File No. 333-147912, filed on December 7, 2007).
2(c). Resolution of Board of Directors of MetLife Insurance
Company of Connecticut (including Certificate of
Conversion, Certificate of Incorporation and Certificate
of Redomestication from Connecticut). Filed herein.
4. Contracts. (Incorporated herein by reference to Exhibit 4
to Post-Effective Amendment No. 8 to the Registration
Statement on Form S-2, File No. 033-33691 filed April
29, 1996.)
4(a). Company Name Change Endorsement. (Incorporated herein by
reference to Exhibit 4(c) to Post-Effective Amendment No.
14 to the Registration Statement on Form N-4, File Nos.
033-65343/811-07465 filed April 6, 2006.)
4(a)(i). Company Name Change Endorsement (6-E120-14). Filed
herein.
4(b). None
4(c). Individual Retirement Annuity Qualification Rider.
L-22445 1-08. (Incorporated herein by reference to
Exhibit 4(c) to the Registration Statement on Form S-1,
File No. 033-33691, filed on April 9, 2008.)
4(d). Individual Non-Qualified Annuity Endorsement. L-22480
8-07. (Incorporated herein by reference to Exhibit 4(d)
to the Registration Statement on Form S-1, File No. 033-
33691, filed on April 9, 2008.)
4(e). Roth Individual Retirement Annuity ("Roth IRA")
Endorsement. L-22481 1-08. (Incorporated herein by
reference to Exhibit 4(e) to the Registration Statement
on Form S-1, File No. 033-33691, filed on April 9, 2008.)
4(f) 401(a) /403(a) Plan Endorsement. L-44292 (5/11).
(Incorporated herein by reference to Exhibit 4(f) to the
Registration Statement on Form S-3, File No.
333-178885,filed on April 6, 2012).
5. Opinion re: Legality of Shares. (To be filed by
amendment.)
8. None.
12. None.
15. None.
23. Consent of Independent Registered Public Accounting Firm.
(To be filed by amendment.)
24. Powers of Attorney authorizing Michele H. Abate,
Christine M. DeBiase, Andrew L. Gangolf, and John M.
Richards to act as signatory for Eric T. Steigerwalt,
Gene L. Lunman, Elizabeth M. Forget, Anant Bhalla, and
Peter M. Carlson. Filed herein.
25. None.
26. None.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes as follows, pursuant to Item 512
of Regulation S-K:
1. To file, during any period in which offers or sales of the registered
securities are being made, a post-effective amendment to this registration
statement:
i. to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
ii. to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price set represent no more
than 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement, and
iii. to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
2. That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
3. To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
4. That, for the purpose of determining liability under the Securities Act of
1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as
part of a registration statement relating to an offering, other than
registration statements relying on Rule 430B or other than prospectuses
filed in reliance on Rule 430A, shall be deemed to be part of and included
in the registration statement as of the date it is first used after
effectiveness. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made
in a document incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the registration
statement will, as to a purchaser with a time of contract of sale prior to
such first use, supersede or modify any statement that was made in the
registration statement or prospectus that was part of the registration
statement or made in any such document immediately prior to such date of
first use.
5. That, for the purpose of determining liability of the registrant under the
Securities Act of 1933 to any purchaser in the initial distribution of the
securities: The undersigned registrant undertakes that in a primary
offering of securities of the undersigned registrant pursuant to this
registration statement, regardless of the underwriting method used to sell
the securities to the purchaser, if the securities are offered or sold to
such purchaser by means of any of the following communications, the
undersigned registrant will be a seller to the purchaser and will be
considered to offer or sell such securities to such purchaser:
i. Any preliminary prospectus or prospectus of the undersigned
registrant relating to the offering required to be filed pursuant to
Rule 424;
ii. Any free writing prospectus relating to the offering prepared by or
on behalf of the undersigned registrant or used or referred to by the
undersigned registrant;
iii. The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the
undersigned registrant; and
iv. Any other communication that is an offer in the offering made by the
undersigned registrant to the purchaser.
6. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
7. Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of Charlotte, State of North Carolina, on February 3,
2015.
MetLife Insurance Company USA
(Registrant)
By: /s/ ELIZABETH M. FORGET
------------------------------------------
Elizabeth M. Forget, Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities indicated
on February 3, 2015.
/s/ *ERIC T. STEIGERWALT Chairman of the Board, President and Chief Executive
------------------------ Officer and a Director
(Eric Thomas Steigerwalt)
/s/ *GENE L. LUNMAN Director and Senior Vice President
------------------------
(Gene L. Lunman)
/s/ *ELIZABETH M. FORGET Director and Senior Vice President
------------------------
(Elizabeth M. Forget)
/s/ *ANANT BHALLA Senior Vice President and Chief Financial Officer
------------------------
(Anant Bhalla)
/s/ *PETER M. CARLSON Executive Vice President and Chief Accounting Officer
------------------------
(Peter M. Carlson)
*By: /s/ MICHELE H. ABATE
----------------------------------
Michele H. Abate, Attorney-in-Fact
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
2(b). Resolution of Board of Directors
4(a)(i). Name Change Endorsement
24. Powers of Attorney