Merrill Offers Fixed Annuity to K Plans

June 8, 2004 ( - Merrill Lynch is now offering to the qualified plan market a fixed group annuity for 401(k) participants.

A news release said Merrill is working with MetLife to provide Personal Pension Builder in which every contribution made is immediately converted to a specific future income benefit similar to a defined benefit plan.

The product has two phases – the accumulation phase, when employees purchase through current salary deferrals guaranteed sources of future income, and the retirement phase , during which employees receive a fixed monthly amount for as long as they live.

The accumulation phase offers three guarantees:

  • a specific future income benefit amount purchased at current prices
  • the income participants accumulate for retirement is guaranteed for life or a period of their choice based on the annuity purchase rate (including interest rate) being offered by MetLife on the date a contribution is made
  • the beneficiary will receive a death benefit equal to the current commuted value of the annuity if the employee dies during the accumulation period. Or, a spousal beneficiary can elect to convert that value to an annuity.

Additional product benefits include:

  • the ability to reduce interest rate risk by averaging purchase rates over time, since each contribution purchases future income based on the then current rate
  • the flexibility to adjust contributions and to make lump sum transfers from other 401(k) options at any time to ensure the desired level of income at retirement
  • the ability to select income options that provide continuing income to someone else in the event of death
  • the option of taking some or all of the accumulated income benefit in cash within 60 days following the benefit start date.