Principal Deferred Income Annuity
A Principal Deferred Income AnnuitySM allows your clients to put money aside now so they’ll have a steady stream of income later. When they purchase a deferred income annuity, they choose when to begin and how often they want to receive income. Flexible premiums allow for higher lifetime income payments. There is also an optional rider available to help income payments keep up with inflation.
In addition, our deferred income annuity product can also be purchased as a qualifying longevity annuity contract – commonly known as a QLAC. A QLAC allows your client to defer taking RMDs from a portion of their qualified assets until as late as age 85. Few other qualified investments offer this opportunity.
- Flexible premium during the deferral period
- Ability to make a one-time change to the income start date
- Payment advancement that allows client to receive up to six months income payments in a lump sum
- Inflation protection riders
- Optional roll-up death benefit option during the deferral period
- Can be purchased as a QLAC
- Are concerned about outliving their savings
- Need to supplement existing retirement income
- Are looking to maximize future income but are uncomfortable with market volatility
- Want to reduce required minimum distributions (must purchase as a QLAC)
- The deferred income annuity is approved in all states
- Available as QLAC in all states
- Minimum initial premium: $10,000
- Minimum additional premium: $2,000
- Maximum premium: $2 million (up to $5 million with home office approval)
- Qualifying longevity annuity contract (QLAC) premium is limited to the lesser of $130,000 or 25% of total IRA balances as of prior year-end (12/31) (excluding Roth and Inherited IRAs)*
- Nonqualified: 0-93
- Qualified: 0-68
- QLAC: 0-82
Income start date
- Selected at contract issue
- Can make a one-time adjustment during the life of the contract (based on the income start date adjustment guidelines)
- Single life annuity: the owner (the person who owns all rights to the annuity) and annuitant must be the same (unless a non-natural owner
- Joint life annuity: the owner and annuitant don’t need to be the same, however the owner must be one of the annuitants
- Joint owners/annuitants must be spouses
Income payment deferral method
- Minimum deferral period: 13 months
- Maximum deferral period:
- Nonqualified: Earlier of 30 years or age 95
- Qualified: Earlier of 30 years or age 70 ½
- QLAC: Earlier of 30 years or the first day of the month following the owner reaching age 85
Income payment frequency
Income start date adjustment
Prior to the income start date, client may make a one-time change (accelerate or postpone) to the income start date:
- May accelerate the income start date up to five years (as long as it’s been at least 13 months since the latest premium payment)
- May postpone the income date up to five years from the original income start date (must be within the maximum deferral period limits)
- The income payment amount will change to reflect the new income start date
- Allows your client to advance up to six income payments and receive in a lump sum
- Automatically issued at no additional cost, subject to state availability
- Available for nonqualified contracts receiving monthly income payments only (not available for qualified contracts, including QLAC, or other payment frequencies)
- Not available for qualified contracts, including QLAC
- Must be at least age 59½
- Available to utilize after the income start date
- Limited to four requests over the life of the contract
- Income payments must resume before this option may be used again
- Optional annual increase rider
- At issue, client elects to have payments increase annually by 1%, 2%, 3%, 4% or 5%
- Income payments are lower at first, but will automatically increase each year
- No additional fee
- Applies during the income phase
- Not available when purchased as a QLAC
Annuity income options (single or joint life)
- Fixed period between 5-20 years (not available with QLAC)
- Life only
- Life with guarantee certain (not available with QLAC)
- Life with cash refund
- Life with installment refund (not available with QLAC)
The death benefit is the amount of money paid to the beneficiary when the owner (and joint owner if any) dies prior to the income start date. The standard death benefit is the total of all premium payments made as of the date of death. The client also has a choice of an optional roll-up death benefit:
- At issue, elect to have the death benefit during the deferral period increase annually by 1%, 2% or 3% if death occurs before the income start date
- Interest is compounded annually and credited daily from the date each premium payment is made.
- Available through issue age 79
- Income payments will be lower if this benefit is elected
After income payments have started, the death benefit will depend on the annuity income option selected.
*Additional restrictions may apply. The dollar limit applies across all qualified retirement plans collectively. The percentage limit applies to each qualified plan separately and to IRAs (excluding Roth and Inherited IRAs) on an aggregate basis. There are restrictions on how premium limit rules can be applied. There are also restrictions on how qualified plan assets can rollover to a QLAC. It’s the client’s responsibility to ensure QLAC premium limitations are met. Roth IRAs cannot be treated as a QLAC.
Key materials listed below.
Need more options? Find additional Principal Deferred Income Annuity materials.
Principal Deferred Income Annuity main brochure and product description (RF1944)
Client-facing brochure and product description describing the features and benefits of the Principal Deferred Income Annuity.
Map a strategy for retirement income (RF1954)
Decision tree tool to help advisors position the Principal Deferred Income Annuity either by itself, or combined with an immediate income annuity and or variable annuity with GMWB. Available for use with clients
Guarantees are based on the claims-paying ability of Principal Life Insurance Company.
Annuities are issued by Principal Life Insurance Company, a member of the Principal Financial Group®, Des Moines, IA 50392. Principal, Principal and symbol design, and Principal financial group are trademarks and service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.
For financial professional use only. Not for distribution to the public.
Not FDIC or NCUA insured. May lose value. Not a deposit. No bank or credit union guarantee. Not insured by any federal government agency.