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Sorting out variable annuity guarantees

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in Small Business Tax

Q: I'm still confused about guaranteed withdrawal benefits and guaranteed monthly income benefits available with some variable annuities. I am interested in the guaranteed monthly income benefit. Can you explain the difference? V.G., via e-mail

A: With a guaranteed monthly withdrawal benefit (GMWB), the insurance company guarantees that even if the market performs poorly, you will not lose the money that you have invested in the variable. Furthermore, over the life of the contract, you can withdraw an amount equal to your total principal. Conversely, a guaranteed monthly income benefit (GMIB) is designed to provide a predictable level of future retirement income, regardless of investment performance or actual account value. Tip: You can find more details about the GMIB feature from Guardian Life at and MetLife at

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