Annuity Basics

What is a deferred annuity?
An annuity is a contract between you and an insurance company. You purchase an annuity contract by making either a single payment or a series of payments. A deferred annuity allows you to defer your income payments and to accumulate money on a tax-deferred basis for long-term goals such as retirement. When you are ready to receive income from your annuity, you can withdraw funds as needed, or you can set up a regular annuity income payment schedule that would last for life or over a given time period in the same manner as immediate annuities.

The Accumulation Phase
Your payment into an annuity is called a Purchase Payment because you are buying an annuity contract. Once you’ve made the initial Purchase Payment, your annuity will have two phases: the accumulation phase, when your money has the potential of growing tax deferred, and the income or payout phase, when you withdraw your money according to a choice of payment options. During the accumulation phase, a fixed annuity will earn a guaranteed minimum interest rate for a certain period of time. In contrast, the value of a variable annuity will fluctuate according to the performance of the selected investment options.

Withdrawing Your Money
Deferred variable annuity products offer varying degrees of liquidity. A Withdrawal Charge or Surrender Charge is a fee you will pay if you cancel your annuity contract within the specified contract period. The withdrawal charge or surrender charge is a descending fee that generally is reduced by one percent each year as the contract approaches maturity. If you withdraw money during the early years of the contract (usually the first seven or eight years), the issuing company may keep a certain percentage of your withdrawals. Products with a shorter withdrawal charge or surrender charge will generally have higher surrender charges. If you need to access your money during the accumulation phase, some contracts allow you to take partial withdrawals without a contract charge.

For tax purposes, withdrawals are considered as first coming from earnings, then from the return of investment. Earnings in your annuity contract are taxed as ordinary income, and if withdrawn prior to age 591/2, there may also be a 10% federal income tax penalty.

Learn More:
• Taking income from your annuity
• Managing your money: The income or payout phase
• Deferred variable annuity features
• Annuities & Taxation

Investors should consider the contract and the underlying portfolios’ investment objectives, risks, charges and expenses carefully before investing. This and other important information is contained in the prospectuses. You should read the prospectuses carefully before investing.

Annuities are issued by Prudential Annuities Life Assurance Corporation. Securities products are distributed by Prudential Annuities Distributors, Inc. Both Prudential Financial companies are located in Shelton, CT. Each is solely responsible for its financial condition and contractual obligations.

Prudential Annuities is a business unit of Prudential Financial.

Wachovia Corporation is the majority owner and Prudential Financial, indirectly through subsidiaries, is a minority owner of Wachovia Securities, LLC.

Prudential, Prudential Financial, the Rock logo, and the Rock Prudential logo are registered service marks of The Prudential Insurance Company of America and its affiliates.

© Copyright 2008 Prudential Financial, Inc. All Rights Reserved.


IFS-A135570 Ed. 08/2008