Annuities & Taxation

The power of tax deferral can help your money grow faster than a currently taxable investment earning a similar return. You pay no taxes on annuity earnings until they are withdrawn. This means all your money keeps working for you until it is withdrawn, without being reduced by annual taxation. Later, when you need your money, only your earnings are taxed.

Annuity Tax Issues
Although annuities generally allow your investment to be held on a tax-deferred basis, you should be aware of certain tax issues before you purchase an annuity.
For example:
• withdrawals from annuities, including partial withdrawals and surrenders, may be taxable.
• taxable distributions from an annuity are generally taxed at the contract owner’s ordinary income-tax rate and do not get the benefit of the lower tax rates received by certain capital gains and dividends under current tax laws.

The death of a contract owner (and, in some cases, the death of an annuitant) may result in taxable distributions that must be made from the contract within a specified period of time.

Upon the death of the owner/annuitant of a contract:
• gains may be taxable to the beneficiary
• the annuity assets may be included in the owner’s estate
• there is no step-up in the tax basis
• annuity assets will bypass probate, unless the contract owner’s estate is the named beneficiary or no beneficiary is named.

If you take a taxable withdrawal before age 591/2, you may have to pay a 10 percent penalty to the IRS on the amount of the gain withdrawn, in addition to your normal income taxes.

Prudential, its affiliates, their respective distributors and representatives does not provide legal or tax advice. You should contact your own tax or legal advisor in regard to your particular situation.

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, which can be obtained on the prospectus page or from your financial professional. 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-A135606 Ed. 08/2008