Types of Annuities

Each type of annuity works differently and offers a unique set of advantages. The two main types are tax-deferred annuities and income annuities. There are also annuities that offer a mix of features, combining elements of tax-deferred and income annuities into a single product.

Tax-Deferred Annuities: To Help Save for Retirement

People saving for retirement may want to invest in a tax-deferred^* annuity after they have maxed out their 401(k) and IRA contributions.¹ Like these other tax-deferred accounts, earnings compound over time without being eroded by taxes—giving your investments the potential to accumulate more than they would in a taxable account. You don't pay taxes on annuity gains until you start withdrawing assets in retirement, at which time your tax bracket may be lower. Keep in mind that annuity gains are taxed at ordinary income tax rates when funds are withdrawn. Annuities have additional expenses not found in mutual funds, which will impact your returns.

Tax-deferred annuities have no IRS contribution limits² so you can invest as much as you want for retirement. You also have the option to create a guaranteed³ stream of income payments in retirement.

Tax-Deferred annuities are either variable or fixed.

Assets in a variable annuity are invested in a way that provides greater market growth potential; however, you could have a loss. Variable annuities are usually appropriate for those who may be further away from retirement and better able to handle the market's short-term ups and downs. Fidelity offers the low-cost Fidelity Personal Retirement Annuity^®4 variable annuity for this type of investor.

Assets in a fixed annuity offer a guaranteed rate of return for a number of years and, generally, guarantee your principal—similar to a CD, but your investment grows tax deferred. Please be aware that, unlike CDs, tax-deferred annuities are not FDIC insured and taxable amounts withdrawn from an annuity prior to age 59½ may be subject to a 10% IRS penalty. Fixed annuities are more suitable for conservative investors who are closer to retirement and want to protect their investment from market volatility.³ Fidelity makes available Tax-Deferred Fixed Annuities from a network of preferred insurance providers.⁵

Income Annuities: For Immediate Income in Retirement

People in or near retirement may want to invest in an income annuity. Because annuities are insurance products, they can offer guaranteed³ income for life. Income annuities have become more popular as life expectancies have increased and people have started to fear outliving their assets. By creating a reliable lifetime income stream, an income annuity may allow you to be more aggressive with other investments in your portfolio, which could provide you with more growth potential.

Like deferred annuities, income annuities can be variable or fixed.

A variable income annuity offers an income stream that includes growth potential that may help you stay ahead of inflation. This income is guaranteed for life, but the actual income amount will vary with the underlying performance of your investment. Fidelity's variable income annuity is the Fidelity Freedom Lifetime Income^®4.

A fixed income annuity offers a guaranteed, fixed-income amount for life, or for a certain period of time. Your guaranteed income payment cannot be affected by market volatility, which helps to shield your retirement income from market risk. Please keep in mind that guarantees are subject to the claims-paying ability of the issuing insurance company. A cost of living increase is also available on some products to help keep pace with inflation. Fidelity makes available Fixed Income Annuities from a network of preferred insurance providers.

Living Benefit Annuities: For Savings and Income

Many people nearing or just entering retirement need an income stream, but they also may need to keep saving to secure guaranteed income without losing access to their investment. Deferred variable annuities with guaranteed living benefits offer different features, including a guaranteed minimum withdrawal benefit: (GMWB)

Fidelity makes the MetLife Growth and Guaranteed Income^SM annuity available for this type of investor.

Before investing, consider the investment objectives, risks, charges, and expenses of the variable annuity and its investment options. Call or write to Fidelity or visit Fidelity.com for a free prospectus containing this information. Please read the prospectus and consider this information carefully before investing. Product availability and features may vary by state. Please refer to the contract prospectus for more complete details regarding the living and death benefits if applicable.

Contract value, income payments, and investment returns of a variable annuity will fluctuate and you may have a gain or loss when money is received or withdrawn.

MetLife Growth and Guaranteed Income annuity (Policy Form Series No. 8800 (10/09)) is issued by MetLife Investors USA Insurance Company (MLIUSA), 5 Park Plaza, Suite 1900, Irvine, CA 92614 and, in New York (Policy Form Series No. 6800 (10/09)), only by Metropolitan Life Insurance Company, 200 Park Avenue, New York, NY 10166 (each, a "MetLife" company). MLIUSA and Metropolitan Life Insurance company are affiliates. The contract's financial guarantees are solely the responsibility of the issuing insurance company. Fidelity Brokerage Services, Member NYSE, SIPC, and Fidelity Insurance Agency, Inc., are the distributors; they are not affiliated with any MetLife company.

*If you are buying a variable annuity to fund a qualified retirement plan or IRA, you should do so for the variable annuity's features and benefits other than tax deferral. In such cases, tax deferral is not an additional benefit of the variable annuity. References throughout this material to tax advantages, such as tax deferral and tax-free transfers, are subject to this consideration.

1. Each individual's situation is unique and therefore seeking additional guidance from a tax advisor is suggested.
2. Fidelity reserves the right to limit contributions.
3. Guarantees apply to certain insurance and annuity products (not securities, variable or investment advisory products) and are subject to product terms, exclusions and limitations and the insurer's claims-paying ability and financial strength.
4. Fidelity Personal Retirement Annuity (Policy Form No. DVA-2005, et al.), and Fidelity Freedom Lifetime Income (Policy Form Nos. FFLI-Q-2005, et al. and FFLI-NQ-2005, et al.) are issued by Fidelity Investments Life Insurance Company and, for New York residents, Personal Retirement Annuity (Policy Form No. EDVA-2005, et al.), and Freedom Lifetime Income (Policy Form Nos. EFLI-Q-2005, et al. and EFLI-NQ-2005, et al.) are issued by Empire Fidelity Investments Life Insurance Company^®, New York, N.Y. Fidelity Brokerage Services, Member NYSE, SIPC, and Fidelity Insurance Agency, Inc., are the distributors.
5. Fidelity Preferred Outside Providers issue annuities that are distributed by Fidelity Brokerage Services, Member NYSE, SIPC, and/or Fidelity Insurance Agency, Inc. and are not affiliated with any Fidelity Investments company. The contract's financial guarantees are solely the responsibility of the issuing insurance company.
6. When the contract value exceeds the benefit base, may also be known as the GWB value, the benefit base may increase. Age restrictions may apply. Withdrawals will reduce the contract value and death benefit, if applicable, and may impact whether your income payments will increase even if your contract value is increasing.
7. Excess withdrawals may significantly reduce the guaranteed withdrawal benefit amount. Surrender charges may apply. Withdrawals of taxable amounts are subject to ordinary income tax, and if made before age 59½ may be subject to a 10% IRS penalty.