Pacific Life Producer Alliance
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Pacific Life Producer Alliance
Pacific Secure Income
Overview

Pacific Secure Income is a fixed, deferred income annuity that can provide guaranteed, pension-like income at a future date. It can be an efficient way to maximize future income because the longer the income start date is deferred, the higher the income amount will be. Clients can make a lump-sum purchase payment or make multiple purchase payments in order to build income at a pace that’s comfortable for them. The product also offers annuity income payments which are unaffected by the markets, so they will remain steady month after month, year after year.

Features

(All features may not be available in all states)

Security of a Pension-Like Income
Clients can allocate a portion of their retirement assets to a deferred income annuity such as Pacific Secure Income and receive the security of a future stream of income payments guaranteed to last as long as they choose— either for a specific number of years or for their entire life. And often, a good retirement strategy may need to help provide security for two people. Pacific Secure Income offers guaranteed income that can last throughout your life and the life of your spouse.

For those clients who don’t need to take income now, the annuity can be established as a Qualified Longevity Annuity Contract (QLAC) and provide the opportunity to defer a portion of their required minimum distributions up to age 85. By deferring a portion of income to a later date, they may delay paying taxes on money they may not need early in retirement. QLAC restrictions apply. Please refer to the brochure, Pacific Secure Income as a Qualified Longevity Annuity, and Fact Sheet for additional details and limitations.

To learn more about a Qualified Longevity Annuity Contract (QLAC), Click Here.

Customize Income through Choice of Income Options and Inflation Protection Option
16 annuity income options—a Period Certain option, as well as several Single Life, Joint Life, and Joint and Survivor Life options. (Subject to state availability.) See the Annuity Income Options section for a list of the various income options offered and more information.

Inflation Protection Option

Pacific Secure Income offers an option to create income that increases each year to help keep pace with inflation.

  • Annual increase of 2%, 3%, or 4% elected at contract issue.
  • Increase begins after annuity income payments begin.
  • Not available with QLAC or with Traditional IRA contracts

Advance or Defer Income Start Date
Before annuity income payments begin, there is a one-time opportunity to advance or defer the Annuity Payment Start Date up to five years (three years in New York) in either direction using the Annuity Payment Start Date Adjustment Feature. (Not available in California or Connecticut.)

Annuity Payment Start Date Adjustment Feature

  • The adjusted Annuity Payment Start Date must be at least 13 months after contract issue or 13 months from the date on which the most recent purchase payment was received, and no later than 30 years from the contract issue date.
  • The annuitant(s) must not exceed the applicable maximum Annuity Payment Start Date age (age 70½ for qualified Traditional IRAs, age 85 for QLAC, and age 90 for nonqualified and Roth IRA contracts).
  • The annuity income payment amount will be adjusted by using this feature. If the Annuity Payment Start Date is advanced, the income payment amount will be reduced. If the Annuity Payment Start Date is deferred, the income payment amount will increase.
  • Available with all annuity income options except Life Only, Joint Life Only, Joint and Survivor Life Only, or Period Certain.
  • Changes to the Annuity Payment Start Date for qualified contracts must meet applicable RMD requirements (Roth IRA excluded).
  • Subject to state availability.

Flexibility to Access Guaranteed Income Payments after Income Payments Begin
After annuity income payments begin, there are two ways to access a larger portion of guaranteed income payments.

Income Payment Acceleration
After reaching age 59½, if clients elect to receive monthly annuity income payments, they may accelerate income payments and receive a lump-sum amount equal to three or six times the normal monthly payment (in the same tax year for qualified contracts), subject to state and firm availability.

  • Normal income payments will resume in the fourth or seventh month, respectively.
  • Available with all annuity income options.
  • This feature can be exercised a maximum of two times.
  • After using this feature, clients must receive at least one normal monthly income payment before using it again.
  • Not available with QLAC.

The following chart assumes normal monthly payments are $1,000 and demonstrates the way the Income Payment Acceleration feature works.

Withdrawal of Guaranteed Income Payments
For nonqualified contracts, clients may make a lump-sum withdrawal of up to 100% of the present value of their remaining guaranteed income payments. Subject to state and firm availability. (Not available in Missouri, Oregon, or Pennsylvania, or with the Period Certain option in North Carolina.)

  • Available with all options except Life Only, Life Only with 100% Return of Purchase Payments Death Benefit, Joint Life Only, Joint Life Only with 100% Return of Purchase Payments Death Benefit, Joint and Survivor Life Only, or Joint and Survivor Life Only with 100% Return of Purchase Payments Death Benefit.
  • Interest-rate adjustment charge will apply.
  • Owner(s) must be age 59½ or older at the time of the withdrawal.
  • Making a withdrawal will lower or may stop remaining guaranteed income payments. However, with the exception of the Period Certain option, if the client is still living at the end of the period when remaining guaranteed income payments would have stopped, Pacific Life will resume income payments until the client’s death.

Please note, if the Income Payment Acceleration feature is used, there is a six-month waiting period before a withdrawal may be taken. Likewise, if a withdrawal is taken, there is a six-month waiting period before the Income Payment Acceleration feature may be used.

Also, if the Annuity Payment Start Date Adjustment feature is used, there is a six-month waiting period before the Income Payment Acceleration feature may be used or before a withdrawal can be made.

Getting Started

Premium: Flexible premium. Multiple purchase payments are permitted only with the lifetime annuity income options. Subsequent purchase payments are not permitted within 13 months of the Annuity Payment Start Date. 1035 exchange/transfer requests will not be accepted within 16 months of the Annuity Payment Start Date. For the Period Certain annuity income option, multiple purchase payments or 1035 exchange/transfers are permitted with the application, and the funds must be received within 60 days of contract issue (90 days in NY), but no subsequent purchase payments are permitted.

Payee will receive one annuity income payment regardless of the number of purchase payments.

Minimum Initial Purchase Payment: $15,000 (nonqualified and qualified)

Maximum Purchase Payment: $1 million; total purchase payments more than $1 million require Pacific Life home-office approval in advance. (Pacific Life reserves the right to change the minimum and the maximum amounts.)

Maximum Qualified Longevity Annuity Contract (QLAC) Purchase Payments: The lesser of $125,000 or 25% of aggregated IRA account values (including existing QLAC purchases) as of the 12/31 of the prior year.

Maximum Annuity Payment Start Date Age (nonqualified and Roth IRA): 90

Maximum Annuity Payment Start Date Age (Traditional IRA): 70½ (For required minimum distribution (RMD) purposes, income payments are required to begin by April 1 of the calendar year following the year a client turns 70½.)

Maximum Annuity Payment Start Date Age (QLAC): Income payments are required to begin by no later than the first day of the following month after attaining age 85.

Minimum Subsequent Purchase Payment: $500

Maximum Issue Age: 85 (nonqualified and Roth IRA); 82 (QLAC); 68 (Traditional IRA)

Minimum Issue Age: 22

Ownership Guidelines:

  • An owner must also be an annuitant (unless the owner is a non-natural person).
  • Joint owners and joint annuitants must be spouses.
  • Joint annuitants are not permitted with the Period Certain option or with non-natural owners.
  • Joint owners are not permitted with the Period Certain option or any of the Single Life annuity income options.
Annuity Income Options

Pacific Secure Income offers several annuity income options that determine the way income payments are distributed while the annuitant is living. These options also determine what happens to any remaining guaranteed income payments upon the annuitant’s death if death occurs after income payments have begun. For information on what happens upon the annuitant's death before income payments begin, please see the Death Benefit section.

Annuity income options are subject to state and firm availability and variations. One annuity income option may be selected per contract. The income option is set at issue and cannot be changed. Annuity income payments are available monthly, quarterly, semiannually, or annually.

Once the contract is converted to an annuity income stream, the payout options cannot be changed. Amounts will differ based on the payout option and period selected. Usually, the longer the payout period, the lower the periodic payment amount.

Period Certain Option

  • Up to 30 years.1,2,3 No subsequent purchase payments are permitted if this income option is selected.

Single Life Options

  • Life Only
  • Life Only with 100% Return of Purchase Payments Death Benefit
  • Life with Period Certain (up to 30 years)1,2
  • Life with Cash Refund
  • Life with Installment Refund2

Joint Life Options

Income payments can be reduced to 50%, 67%, or 75% of the current income payment upon the death of either annuitant.

  • Joint Life Only
  • Joint Life Only with 100% Return of Purchase Payments Death Benefit
  • Joint Life with Period Certain (up to 30 years)1,2
  • Joint Life with Cash Refund
  • Joint Life with Installment Refund2

Joint and Survivor Life Options

Income payments can be reduced to 50%, 67%, or 75% of the current income payment upon the death of the primary annuitant.

  • Joint and Survivor Life Only
  • Joint and Survivor Life Only with 100% Return of Purchase Payments Death Benefit
  • Joint and Survivor Life with Period Certain (up to 30 years)1,2
  • Joint and Survivor Life with Cash Refund
  • Joint and Survivor Life with Installment Refund2

For the Life Only, Joint Life Only, and Joint and Survivor Life Only annuity income options, if death occurs before the Annuity Payment Start Date, no death benefit or income payment will be received.

1For qualified contracts, the maximum length of time for the Period Certain options may be less than 30 years if necessary to comply with RMD regulations for annuities.
2Not available with QLAC.
3Not available in Oregon or Pennsylvania.

Death Benefit

Before Annuity Income Payments Begin

If death occurs before annuity income payments begin, a return of purchase payments death benefit applies (except for the Life Only, Joint Life Only, and Joint and Survivor Life Only annuity income options).

  • For contracts with a non-natural owner: A death benefit becomes payable at the death of the first annuitant.
  • For Single Life options or the Period Certain option: The contract is terminated at the death of the first owner or annuitant, and a return of purchase payments death benefit is paid (except for the Life Only annuity income option).
  • For Joint Life as well as the Joint and Survivor Life options: The contract is terminated at the death of the first owner or the last annuitant, and a return of purchase payments death benefit is paid (except for the Joint Life Only and Joint and Survivor Life Only annuity income options). At the time of death, if the surviving spouse is an annuitant and a joint owner (if applicable), the spouse can continue the contract instead of receiving the death benefit.
  • The recipient of the death benefit will receive a lump-sum payment.
  • If an owner or an annuitant is diagnosed with a terminal illness resulting in a life expectancy of 12 months or fewer on or after the contract issue date, a death benefit will be paid (except for Life Only, Joint Life Only, or Joint and Survivor Life Only). Other restrictions may apply and availability may vary by state. Please refer to the contract for details. Not available in California, Oregon, or Pennsylvania.

After Annuity Income Payments Begin
If death occurs on or after the Annuity Payment Start Date, the selected annuity income option will determine any additional payments made.
 

Qualified contracts, including traditional IRAs, Roth IRAs, and QLACs are eligible for favorable tax treatment under the Internal Revenue Code (IRC). Certain payout options and certain product features may not comply with various requirements for qualified contracts, which include required minimum distributions and substantially equal periodic payments under IRC Section 72(t). Therefore, certain product features, including the ability to change the annuity payment start date and to exercise withdrawal features, may not be available or may have additional restrictions. The payment acceleration feature is available but may be considered a modification to the 72(t) program and may subject the series of 72(t) withdrawals, including any prior withdrawals, to an additional 10% federal tax. In addition, certain payout options and features may not be available for qualified contracts or QLAC.

Pacific Secure Income can be used as a qualified longevity annuity contract (QLAC), subject to state and firm availability. In order for the contract to be eligible as a QLAC, certain requirements under Treasury Regulations must be met, including limits on the total amount of purchase payments that can be made to the contract. Compliance with the QLAC purchase payments limit is the owner’s responsibility, and failure to adhere may result in the contract no longer being considered a QLAC, and would subject the value of the QLAC to required minimum distribution requirements that may not be accessible through the contract. In addition, there are restrictions on annuity payout options that can be elected under a QLAC contract, and the commutation, payment acceleration, and inflation protection features are not available. Changes to marital status may require a change to the annuity payout option and/or payments in order to maintain the QLAC status.

Income from annuity payments received from Pacific Secure Income cannot be aggregated or combined with income from other IRA contracts/assets for purposes of satisfying the required minimum distributions.

For Roth IRAs, upon the Roth IRA owner's death, distributions to the designated beneficiaries may be subject to IRS required minimum distribution rules. If the designated beneficiary is not the spouse, the beneficiary may be required to take a lump sum payment of the present value of the guaranteed payments if a death benefit becomes available. For the purpose of qualified distributions from a Roth IRA, since the five-year waiting period is tracked by the Roth IRA holder, the designated beneficiary and/or spouse who elects to treat the Roth IRA as his or her own will also need to take on this responsibility going forward when claiming qualified distributions.

Nonqualified contracts may not be subject to the various requirements for qualified contracts, but are still subject to an additional 10% federal tax for annuity payments, withdrawals, and other distributions prior to age 59½. While there are exceptions to this additional federal tax under IRC Section 72(q), certain payment options may not comply. The payment acceleration feature may be considered a modification to the 72(q) program and may subject the series of 72(q) withdrawals, including any prior withdrawals, to an additional 10% federal tax. For nonqualified contracts, an additional 3.8% federal tax may apply on net investment income.

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