SECURITY BENEFIT | 11
Market Value Adjustment (MVA) — in order to help us manage changing market conditions and interest rate environments, Security Benefit applies a Market Value Adjustment (MVA) to withdrawals that exceed the total Free Withdrawal Amount during the Surrender Charge Period. The MVA also applies if you annuitize or surrender during the Surrender Charge Period and to the death benefit paid upon the death of an Owner who is not the spouse of the Annuitant. In general, if at the time of withdrawal, interest rates as measured by the 10-year Constant Maturity Treasury rate are higher than when you purchased your annuity, an additional amount is deducted from your withdrawal. Conversely, if interest rates are lower than when you purchased your annuity, an additional amount may be added to your withdrawal. The MVA will not apply to withdrawals that are less than or equal to the total Free Withdrawal Amount or to the death benefit paid upon the death of the Annuitant or the death of the Joint Owner (if the Joint Owner is the spouse of the Annuitant). For contracts issued in CA, an MVA does not apply. See the SOU for more details.
Power of Tax Deferral Simply put, tax deferral postpones the payment of taxes on your contract’s accumulation until a later date — meaning 100% of the interest credited is compounded and won’t be taxed until you withdraw the money, usually at age 59½ or later. 4 An IRA is an example of a tax-deferred retirement savings vehicle (keep in mind that you receive no additional tax deferral benefit by funding an IRA with an annuity). In this example, we compare the hypothetical accumulation of $200,000 in retirement savings — one account grows tax-deferred, while the other has taxes taken out each year. See the difference in account value over a five, 10- and 20-year period of time. An annuity allows accumulated interest credits to be tax deferred; meaning you only pay taxes upon withdrawal.
Tax-Deferred Account Growth Comparison
Initial Balance
Year 5
Year 10
Year 20
Taxable
Tax-deferred
This example assumes an annual interest rate of 5%, and a Federal income tax rate of 32% (but no state tax is assumed). This example is hypothetical and in no way relates to the actual interest that may be credited by the annuity. Funds withdrawn from the tax-deferred account are taxable upon withdrawal.
4 Withdrawals from an annuity prior to age 591/2 may be subject to a 10% federal tax penalty.
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