1. Welcome to The Retirement Red Zone®
A Critical Time in Your Investment Life
[Name of Presenter:]
[Title of Presenter:]
[In CA & AR, add License #]
[Date: ]
Speaker Instructions: You have the option of presenting this seminar two ways:
Option 1 – present this seminar in its entirety
Option 2 – present this seminar in conjunction with the new optional benefits presentation: [Why Prudential Annuities®? Optional Income & Accumulation Benefits, ].
If you choose Option 2, please present this seminar before you present one, some or all of the optional benefits modules.
Good morning/afternoon everyone. My name is (insert name). On behalf of Prudential Annuities, I want to thank you for taking the time to be here today.
SPEAKER NOTE: As appropriate, say the following… I am a Financial Advisor employed by (add your specific Firm information here). I hold registrations with FINRA and I am licensed by the state insurance commission, so that I can talk to you about securities and insurance products.
“Welcome to The Retirement Red Zone — A Critical Time in Your Investment Life.” That’s the name of my presentation, and by the time we’re through here today, you’ll have a clear understanding of what The Retirement Red Zone is and why all of us in this room, including me, need to know why it is so important to our financial futures.
How many of you here today have employer-sponsored retirement accounts, such as a 401(k)? (Speaker: Ask for a show of hands.)
How many of you have transferred balances from those accounts to Rollover IRAs? (Speaker: Ask for a show of hands.)
These assets probably represent your biggest retirement resource, and protecting that money needs to be one of your top planning priorities. This is the theme of today’s presentation.
[When presenting in AR, CA, IL, OK or TX, use the phrase “Insurance Sales Presentation.”]

2. Investments are offered through [broker dealer name], a registered broker dealer (member FINRA/SIPC). Insurance is offered through [agency name].
[Broker dealer name] and [agency name], located at [address], are not affiliated with Prudential Financial.
[Optional Slide] For use in IBD and Banks only.

3. Today We’ll Cover New retirement challenges
What is The Retirement Red Zone?
What investment setbacks in the Red Zone can do to your plans
A strategy offering protection, growth and a guaranteed lifetime income
First we’re going to start by looking at what I call the “new retirement challenges.” (Click here)
Many of these issues have been talked about quite a bit in the news in recent years. Some are affected by politics, like what’s happening with Social Security and Medicare. But the biggest factor is the pending retirement of the baby boom generation — the 78 million Americans born after World War II and into the early 1960s. In fact, I think I see a few boomers in the audience today. That’s good, because what you’re going to learn is important.
Next, we’ll move into the real meat of today’s presentation. (Click here) You’ll learn what The Retirement Red Zone is, whether you are in it, (Click here) and how investment setbacks while you are in The Retirement Red Zone could cause damage to your retirement savings and your ability to make your money last.
We’ll also review some original research conducted by Prudential that offers valuable insight into the retiree mentality that we can all learn from.
(Click here) Finally, you’ll hear about a strategy or strategies for coping with, even thriving in, The Retirement Red Zone.   
Before we begin, though, I just want you to know that I love audience participation, so please feel free to jump in and ask questions at any time. I’ll do my best to answer them. Let’s get started.

4. You Are Facing New Retirement Challenges
Social Security
Pensions
Health Care
Longevity
As I mentioned a minute ago, the coming generation of retirees will face many new challenges that are unique to the idea of retirement in America.
Your retirement is going to look and feel different from your parents’ retirement in many ways. The good old days of retiring at age 65 with the gold watch and a guaranteed pension may be gone for good.
What has replaced them? A lot of uncertainty. For instance, (Click here) Social Security is facing potential funding shortages in the future, which has a lot to do with the shrinking workforce.
Today, there are 3.3 workers contributing to the system for every person receiving benefits. Within 25 years, that ratio will shrink to about 2 to 1. Compare these numbers to the situation in 1950, when there were about 16.5 workers paying Social Security tax for each beneficiary.*
Next there are the 78 million baby boomers, which I mentioned earlier, who will put enormous strain on the Social Security system. And, the first of them have started to retire. I think you see where this is going. With fewer workers to generate taxes to support Social Security, we probably can all expect to receive less government support as we grow older.
(Click here) The next new challenge is the gradual disappearance of the traditional company pension plan. How many of you here today have a pension plan — not a 401(k) plan that you contribute to — but a pension funded exclusively by your employer? (Speaker: Ask for a show of hands.) The number of private companies offering pension plans has been shrinking dramatically since the 1980s. Companies are either phasing out pensions entirely or replacing them with defined contribution retirement plans, like a 401(k).
(Click here) Health care is another big expense that keeps getting bigger. In 2008, total national health expenditures were expected to rise 6.9 percent -- two times the rate of inflation.** Paying for those increases is a challenge for Americans of all ages, but none are more vulnerable to rising costs than retirees.
Finally, and perhaps most importantly, (Click here) the factor that makes all of these challenges even greater is the fact that we, as a nation, are living longer. I want to take a moment to discuss the longevity issue a bit more, because even if the other challenges I mentioned don’t affect your retirement, there’s no avoiding the challenges that longevity can place on your retirement investing efforts. Before we talk about longevity, I thought I’d share with you a foolproof retirement planning strategy… (Speaker: Smile and then click to the next slide, which shows a humorous cartoon.)
*Source: Social Security Trustees Report, 2008.
**Source: National Coalition on Health Care, “Facts on Health Care Costs”, 2009.

5. Longevity: A Good News, Bad News Story
For those in the back of the room who can’t read the caption on this cartoon, it’s a husband saying to his wife: “If we take a late retirement and an early death, we’ll just squeak by.” Certainly, a foolproof retirement strategy, I’d say! But certainly not one that I or any of you want to be a part of!
Don’t get me wrong: Longevity is great news, especially if it comes with vitality and good health.
But let’s put things in their proper perspective, particularly in the context of your retirement planning efforts. Researchers from the Society of Actuaries who study life expectancy for a living say that a healthy woman who is 65 years old today has almost a 70% chance of living to the age of 85 and a 32% chance of reaching 95.
For a healthy couple who are both 65, the Society says there is almost a fifty-fifty chance that at least one of them will live to age 95.
Let’s face it. Living longer is everyone’s goal. But when you consider that living longer means potentially funding retirement for 30 years, then you can see how all the challenges we just discussed take on real meaning.
There’s a name for this situation. It’s called longevity risk.
Today — for all of us in this room — longevity risk is a very real concern because we need to plan for a retirement that could last 30 years or more. That’s a tall order.
© The New Yorker Collection 2003 Barbara Smaller from cartoonbank.com All Rights Reserved

6. What Is The Retirement Red Zone?
Okay. We’ve covered the challenges that we know about. Now the question is: What can you do to make sure these issues don’t stand in the way of your own comfortable retirement? Let me ask you a question:
Are you nearing your retirement target date or have you recently retired?
If you answered “yes”, you are in The Retirement Red Zone---the critical years before and after you retire.
This timeframe may represent the most crucial juncture of your investing life. Why? Because poor market performance during this period can have serious effects on your portfolio at the very time when you can least afford it.
When you enter The Retirement Red Zone, it’s important to evaluate your retirement assets and make every effort to help protect and grow those assets so they will generate income that lasts a lifetime.

7. In the Red Zone, Time Is Not on Your Side
S E Q U E N C E R I S K
$350,000
$308,000
($15,400/yr)
The important thing to remember about The Retirement Red Zone is that you have to forget everything you’ve been told about long-term investing. That’s because you don’t have the luxury of time that younger investors have. For example, the chart on this slide shows a hypothetical portfolio valued at $250,000 going into the first five years of The Retirement Red Zone — what we’ve referred to in this chart as “the retirement countdown years.” (Speaker: Click and point at the starting balance of $250,000 on the “Value (Y)” axis and the “Retirement Countdown Years (X)” axis.)
(Speaker: Click on the first build showing the 12% and 10% increases.) As you can see, the hypothetical investments did very well through the first two years of the countdown period, but then took a sharp dive in years three and four (Speaker: Click on the second build showing the -19% and -15% drops in performance.) With one year to go until retirement, the account has dropped well below its high mark. (Speaker: Point to performance low point on chart.) So, how would that mesh with a retiree’s original income expectations?
Imagine for a moment this is you we’re talking about. Four years ago, you were sitting on $250,000. You figured your savings would earn 8% each year over the next five years. At that rate, you’d be looking at just over $367,332 to draw income from. You figure you’ll need 5% of that each retirement year, which is $18,367. So, after two years, you’re feeling pretty good and you’re thinking to yourself: “Hey, my account is now worth $308,000. At this amount, 5% withdrawals each year would equal $15,400. So, I’m looking pretty good.”
But then this happens (point to decrease) and just like that, you find yourself with $212,058 — that’s less money than you started with. Now you’re no longer on track to meeting your own retirement expectations. If you were to retire at this point and stick to your original 5% withdrawal plan, you’d be looking at an income of only $10,602. So, what now? I suppose you could hope to recoup the losses, right? Well, let’s take a look to see if that’s even realistic. (Click to reveal the fourth build.)
With just one year to go until retirement, the news is not good in our hypothetical portfolio. Having suffered two consecutive years of double-digit losses so close to the retirement target date, this portfolio would need to gain 45% in one year to fully recover the principal and gains — where we would have been after year two. As history tells us, that type of market performance is all but unheard of. In fact, according to Standard & Poor’s, the average annual increase for a portfolio of stocks since 1926 has been 12.8%.* Furthermore, it would take a full five years at a more reasonable 8% rate of return to fully recoup the losses. That’s time an investor in the Red Zone just doesn’t have.
The moral of this story? Poor investment performance — whatever the reason — when you are in the countdown phase of The Retirement Red Zone can dramatically alter the health of your retirement savings — and your expectations for retirement income.
*Source: Standard & Poor’s. For the period January 1, 1926 through December 31, Stocks are represented by the monthly total returns of the S&P 500, an unmanaged index considered representative of the broad U.S. stock market. Investors cannot invest directly in any market index. Past performance does not guarantee future results.
$300,000
10%
12%
-19%
$250,000
Value
-15%
$200,000
$212,058
($10,602/yr)
$150,000 5 4 3 2 1
Intended retirement
Retirement Countdown (Years)
This chart is hypothetical and one example of the returns an investor theoretically could experience during a given period, and it is not intended to depict past or future performance of a variable annuity or subaccount within a variable annuity. If this were an actual example, various costs would be factored into the gross return, including annual insurance and administrative charges of the annuity, annual contract charges, investment management fees of the variable subaccounts, the cost for any optional features, and any other applicable fees.

8. Sequence of Returns: It Can Be Hard for a Portfolio to Recover From Early Losses
This is a hypothetical example for illustrative purposes only. It does not reflect a specific annuity, an actual account value or the performance of any investment. It assumes a
6.0% net average annualized return on a $250,000 value rounded to the first decimal. The various columns are intended to demonstrate the impact of the sequence of returns, assuming 5% annual withdrawals of $12,500 (increasing at 3% annually for inflation). The hypothetical returns above are net of insurance charges of 1.85% and portfolio
expenses of 1.28% (which represents the average portfolio charge as of 12/31/2009). Portfolio fees vary depending on the portfolio(s) selected, and may fluctuate during the year. Past performance does not guarantee future results. See the prospectus for details.
Now that we’ve looked at potential investment hazards in the years leading up to retirement, let’s take a look at another aspect of the Red Zone — the years immediately following retirement.
This is an even more dangerous time for your retirement savings, again because of the timing factor. Keep in mind that the example we are about to walk through is just a hypothetical example and does not reflect the actual investment results of any retired person, nor does it illustrate actual market performance.
Okay then, let’s assume we are looking at the investment performance of Mr. Smith. Mr. Smith is 62, and he retired with savings worth $250,000. His plan is to withdraw 5% of his starting account value each year, adjusted annually for 3% inflation.

9. Sequence of Returns: It Can Be Hard for a Portfolio to Recover From Early Losses
This is a hypothetical example for illustrative purposes only. It does not reflect a specific annuity, an actual account value or the performance of any investment. It assumes a
6.0% net average annualized return on a $250,000 value rounded to the first decimal. The various columns are intended to demonstrate the impact of the sequence of returns, assuming 5% annual withdrawals of $12,500 (increasing at 3% annually for inflation). The hypothetical returns above are net of insurance charges of 1.85% and portfolio
expenses of 1.28% (which represents the average portfolio charge as of 12/31/2009). Portfolio fees vary depending on the portfolio(s) selected, and may fluctuate during the year. Past performance does not guarantee future results. See the prospectus for details.
As you can see, his investments got off to a bad start. He experienced three straight years of negative performance, the worst of which — -18.6% — occurred in the year he retired.
What does this negative return so early in his retirement do to his savings? It is even more devastating during retirement because Mr. Smith is also withdrawing money. This combination –poor performance early in retirement coupled with taking income – means that he’ll run out of money entirely in 15 years, at age 77.
(Speaker: Motion down the arrowed line to the $0 balance in column #3.)

10. Sequence of Returns: It Can Be Hard for a Portfolio to Recover From Early Losses
This is a hypothetical example for illustrative purposes only. It does not reflect a specific annuity, an actual account value or the performance of any investment. It assumes a
6.0% net average annualized return on a $250,000 value rounded to the first decimal. The various columns are intended to demonstrate the impact of the sequence of returns, assuming 5% annual withdrawals of $12,500 (increasing at 3% annually for inflation). The hypothetical returns above are net of insurance charges of 1.85% and portfolio
expenses of 1.28% (which represents the average portfolio charge as of 12/31/2009). Portfolio fees vary depending on the portfolio(s) selected, and may fluctuate during the year. Past performance does not guarantee future results. See the prospectus for details.
Now look at what could have happened if the annual returns were EXACTLY reversed — that is, if Mr. Smith’s investments had done well in the early years of his retirement and he didn’t experience declines until much later on.
Not only would his portfolio generate income for his entire retirement, but also his savings would have nearly tripled in value from his starting balance! The key to remember here is that both of these scenarios assume the same 6.0% net average rate of return over a 30-year period and 5% withdrawals adjusted for 3% annual inflation.
This chart is a powerful example of the importance of timing in relation to investment gains or losses when you are in the early years of retirement. Positive returns early may mean a lifetime of sufficient income, while early losses can mean running out of money in the midst of retirement.
I’d also like to note a third scenario for any mattress stuffers in the room. What if you got 0% return during retirement? You’d also run out of money after 14 years. Unfortunately, the bottom line is that the timing of market losses and gains is something that we cannot control.
I’m going to guess that at this point some of you may be thinking that you’d have to be pretty unlucky to experience negative returns at the start of retirement. Well, I’m here to tell you that history hasn’t been as kind as one might think.

11. Inflation Doesn’t Stop Just Because You Retire
How much will it take to maintain your retirement lifestyle?
$90,000
$82,889
$80,000
$70,000
$60,000
107% Increase!
The increasing cost of living is a very important consideration when planning for your retirement.
Inflation increased 107% in the 25-year period from , or 3.1% per year.  An item costing $1 in 1983 would have cost $2.16 in 2008.  An individual living on a fixed income over the 25-year period would have only 46% of the purchasing power today that he or she had at the end of 1983*.  
Let’s take a look at an example. Let’s say during a retiree’s retirement, the annual inflation rate averages the same 3.1% over a 25-year period. How would this affect a retiree with initial retirement income needs of $40,000 over these 25 years? (Click)
As you can see, over 25 years, the annual income needs of this hypothetical retiree jump from $40,000 to $82,889…(Click) an increase of 107% just to maintain this retiree’s retirement lifestyle.
* Source: U.S. Department of Labor, 2009.
$50,000
$40,000 5 10 15 20 25
Example illustrates annual income need of $40,000 increasing annually by an inflation rate of 3.1%.

12. Growth of $10,000 from 1925 – December 31, 2008
Could a Market Decline Coincide With Your Retirement Timing?
Growth of $10,000 from 1925 – December 31, 2008
How likely is it that a market decline will coincide with your retirement timing? No one knows for sure. We do know what history tells us — that over long periods of time the stock market has delivered positive returns on an average basis. But we also know that in the shorter term, stocks fluctuate in response to many factors.
This chart provides a glimpse at some notable market declines over the past 30 years. In looking back several years to March 2000, it certainly seemed an opportune time to retire. Similarly in 2007, personal portfolios were growing, thanks to a stock market that was at an all-time high. We then saw an unprecedented market decline in As in 2001, many investors lost a considerable amount of their savings in a short time. Younger investors may have time to recover, but other investors, without the luxury of time to recover, may be forced to delay retirement or dramatically adjust their retirement lifestyles.
There have been many other periods of decline throughout history — even though the particular events that triggered them may have been different. And there will no doubt be more periods of market decline in the future.
So how can we deal with this uncertainty?
Source: UBS Asset Management, Note: $10,000 may not be representative of a typical investment in This chart is for illustrative purposes only and is not indicative of the performance of any investment or annuity product. Stocks represented by Standard & Poor’s (S&P) 500 Index, long-term government bonds by 20-year U.S. Treasury bonds, 90-day U.S. Treasury bills and inflation by the Consumer Price Index. Index returns assume reinvestment of all distributions and do not reflect product fees, expenses, or sales charges, which would lower the performance shown. You cannot invest directly in an index. The time period shown is not a realistic investment horizon for retirement saving. While the chart demonstrates that long-term exposure to equity markets may yield a positive return, past performance is not a guarantee of future results.
$19,388,559
$967,470
$228,483
$ 118,673
Source: UBS Asset Management, Note: $10,000 may not be representative of a typical investment in This chart is for illustrative purposes only and is not indicative of the performance of any investment or annuity product. Stocks represented by Standard & Poor’s (S&P) 500 Index, long-term government bonds by 20-year U.S. Treasury bonds, 90-day U.S. Treasury bills and inflation by the Consumer Price Index. Index returns assume reinvestment of all distributions and do not reflect product fees, expenses, or sales charges, which would lower the performance shown. You cannot invest directly in an index. The time period shown is not a realistic investment horizon for retirement saving. While the chart demonstrates that long-term exposure to equity markets may yield a positive return, past performance is not a guarantee of future results.

13. What Should an Effective Retirement Investment Offer?
Reduction of downside risk in declining markets
The ability to capture the market’s upside potential
Guaranteed lifetime retirement income, without giving up control of your savings
Dealing with volatile markets is a natural part of investing. A challenge for many investors is to stay on track with their long-term retirement income plan through periods of market uncertainty. This uncertainty generally prompts investors to search for more conservative investments to help protect their retirement income.
Now, in describing an effective investment, let’s review the challenges you may face in The Retirement Red Zone. First off, you can ill afford to subject your hard-earned retirement assets to unexpected dips in the market. At the same time, you need to expose those same hard-earned assets to the market in order to capture potential growth — that way, you can create a retirement income stream that won’t deplete your assets.
Based on what I just described, an effective retirement investment would include three very important components:
(Speaker: Click and point to slide.) First, it would offer you some protection from declining markets.
(Speaker: Click and point to slide.) Second, it would also give you the ability to capture the market’s upside potential.
(Speaker: Click and point to slide.) And finally, it would provide you with a guaranteed retirement income for life, without having to annuitize.
What if I were to tell you that there is now an investment product available that offers all of these benefits in a single, packaged solution?

14. A Variable Annuity Offers…
A choice of payment options
A choice of professionally managed investment accounts
Tax deferral
Standard death benefit protection
Optional living & death benefits
A variable annuity with the right type of optional benefit may be an ideal choice for The Retirement Red Zone investor. Let me just take a few moments before I continue and give everyone the 30,000-foot overview of variable annuities.
A variable annuity is a contract between an investor and an insurance company in which the insurer agrees to make periodic payments to the investor, beginning either immediately or at some future date. You can purchase a variable annuity contract by making either a single purchase payment or a series of purchase payments, and unlike most qualified retirement plans, there are no contribution limits.
(Click) Variable annuities provide a variety of ways to access money in retirement, including income for a specified period of time or amount, or lifetime income with a specific time-period guarantee.
(Click) Investment choice. A variable annuity is designed for people willing to take more risk with their money in exchange for greater growth potential. Variable annuities typically offer a range of professionally managed investment options with varying degrees of risk and potential for appreciation. It is important that investors work with a financial professional to determine which annuity product and investment options are suitable for their retirement needs.
(Click) Tax deferral. Variable annuities offer the advantage of tax deferral on any investment earnings that accumulate over time. (Speaker: Read the following): When you purchase a variable annuity for a tax-qualified retirement plan, you do not receive any additional tax-deferred treatment beyond what is provided in your current plan. Hence, you should consider a variable annuity for a tax qualified plan only if other benefits are desired such as a death benefit or annuity payout options that can provide guaranteed income for life. Please work with a tax advisor and financial professional regarding your own direct or indirect rollover situation.
(Click) Protection for your beneficiaries.  Many variable annuities feature a guaranteed death benefit. If you should die during the accumulation phase, the issuing company will return the amount of your original purchase (less any withdrawals you’ve made) to your beneficiary, even if your annuity has declined in value. This death benefit avoids the costs and delays of probate. (Estate and income taxes may apply.)
(Click) Additional Protection. Many variable annuities offer optional features called riders that can help protect your investment and provide added advantages, such as a guaranteed income stream for life. For instance, a “living benefits” rider helps protect retirement income during your lifetime while a “death benefits” rider helps preserve any investment gains for your beneficiaries or provides an annual growth percentage up to a maximum limit. Optional features, such as riders, are available for an added fee and have limitations.
Fees and withdrawal charges. Variable annuities offered by Prudential Financial companies are available at a total annual insurance cost of 0.55% to 1.85%, with an additional fee related to the professionally managed investment options. The costs associated with variable annuities vary depending on the annuity and any optional features selected. Charges are deducted to cover the cost of issuing and maintaining the annuity contract, for insurance guarantees associated with the underlying base death benefit, as well as management expenses of the underlying investment options.
In addition, while variable annuities generally allow investors to access up to 10% of their purchase payments each year without incurring any charges, such withdrawals will be subject to ordinary income taxes and, if withdrawn prior to age 59½, may be subject to a 10% federal income tax penalty. In addition, withdrawals that exceed a specified annual amount may be subject to a withdrawal charge. Withdrawal charges are assessed for a specific period of time and generally reduce each year. A complete explanation of charges and additional costs is provided in an annuity’s prospectus. Please read it carefully before investing. All guarantees, including optional benefits, are based on the claims-paying ability of the issuing company.
Fixed income investments are subject to risk, including credit and interest rate risk. Because
of these risks, a subaccount’s share value may fluctuate. If interest rates rise, bond prices usually
decline. If interest rates decline, bond prices usually increase.
A variable annuity is a long-term investment designed to create guaranteed income in retirement. The money is allocated to professionally managed investment portfolios that you select, where it accumulates tax-deferred. When you retire, your savings can be used to generate a stream of regular income payments that are guaranteed for as long as you live. In addition, variable annuities provide a guaranteed death benefit for your beneficiaries.
Withdrawals and distributions of taxable amounts are subject to ordinary income tax and, if made prior to age 59 1/2, may be subject to an additional 10% federal income tax penalty. Withdrawals, other than from IRAs or employer retirement plans, are deemed to be gains out first for tax purposes.
Withdrawals or surrenders may be subject to contingent deferred sales charges and can reduce the account value and living and death benefits. Investment returns and the principal value of an investment will fluctuate so that an investor's units, when redeemed, may be worth more or less than the original investment. Variable annuities offered by Prudential Financial companies are available at a total annual insurance cost of 0.55% to 1.85%, with an additional fee related to the professionally managed investment options. HD Lifetime 6 Plus is available for an additional annual fee of 0.85% based on the greater of the account value and the Protected Withdrawal Value. The fees will vary depending on the underlying annuity and investment options selected. Please see the prospectus for complete details.

15. A Good Choice for Qualified Plan Assets
Leave assets in your former employer’s plan
Transfer assets to a new employer’s plan
Cash out (take a lump-sum distribution)
Rollover IRA
Let’s take a moment now to think about your qualified retirement plan assets. For most of us, the savings we have set aside in a tax-qualified retirement account, such as a company-sponsored 401(k) plan, represent our second largest asset next to our homes. During your prime earning years, you may be focused on accumulating assets in these plans. But as retirement draws closer, your attention may be focused on preserving those assets. Because retirement planning is a lifelong process, you have important decisions to make about what to do with the assets you’ve saved.
In general, you have four options for managing your retirement account assets after leaving a job or retiring. Each option has its advantages and disadvantages. Let’s take a closer look.
(Click) You may be able to leave the money in your former employer’s plan. Leaving your assets where they are is the easiest option because it requires no action on your part. You will continue to benefit from tax-deferred compounding, and you’ll have some control over how your money is invested among the plan’s investment options.
On the downside, you will no longer be able to contribute to the plan, which could slow account growth, and your investment choices will be limited to whatever the plan offers. Plus, if you change jobs frequently, you may find yourself with several separate plans from former employers, each with their own plan administrator and investment offerings.
(Click) You also may be able to transfer the balance to a retirement account sponsored by your new employer. As with the first option, you’ll continue to enjoy tax deferral on the full account balance, but once again, your investment choices are likely to be limited. Plus, you’ll need to investigate how the new plan’s rules compare to your old plan’s rules. For example, one plan may allow participants to borrow money from their accounts, while another may not.
(Click) Third, you may cash out the account by taking a lump-sum distribution. As tempting as this sounds, it has costly drawbacks — top among them a 20% mandatory federal tax withholding, ordinary income tax, and a 10% early withdrawal penalty if you separate from service before age 55. Aside from the taxes and penalties, don’t overlook the obvious problem with a cash-out distribution. By taking money out of your tax-deferred retirement account now, you run the risk of not having enough money on hand in retirement.
(Click) Finally, but first on my list, is rolling over your retirement plan assets from your former employer’s plan into an IRA.
(Speaker read the following): It is important to note: Qualified Plan rollovers can be appropriate for many individuals. There are, however, some other things to think about:
Exceptions to the 10% federal income tax penalty – The penalty exceptions for distributions from employer plans and IRAs are not identical. Two exceptions apply to an employer plan but not an IRA – separation from service at or after age 55 and qualified domestic relations orders. Conversely, IRAs provide penalty exceptions for first-time home purchase and higher education, but employer plans do not.
Net Unrealized Appreciation (NUA) tax treatment – Favorable NUA tax treatment is not available to IRAs. Therefore, if an individual has highly appreciated company stock in an employer-sponsored plan, rolling that stock to an IRA eliminates the ability to take advantage of NUA tax treatment.
Creditor protection – While IRAs now have federal bankruptcy protection, as do all qualified plans, IRAs may be subject to the claims of non-bankruptcy creditors unless protected under state law.
Loans – In the event that a 401(k) is terminated, the loan may be subject to income taxes and a federal income tax penalty.
New contributions to the employer plan – Taking distributions may affect your ability to make future contributions to the employer plan.

16. A Good Choice for Qualified Plan Assets
Help reduce downside risk in declining markets
No immediate tax consequences or penalties
An array of investment choices
While your employer-sponsored retirement plans have served you well in your pursuit of building a sizeable retirement account, they don’t offer anything in the way of downside protection. If markets go down, your retirement assets go down. Unfortunately, it’s that simple.
(Click) Today’s variable annuities may be a good choice for qualified plan assets. Placing your qualified plan assets into an IRA with a variable annuity with the appropriate type of optional benefit may help protect your assets from market downturns and help you capture potential market gains.
(Click) Plus, with a variable annuity held in a Rollover IRA, there are no immediate tax consequences or early withdrawal penalties.
(Click) And a variable annuity typically offers a wider array of investment choices than the average employer-sponsored retirement plan.
I do need to mention one additional thing. When you purchase a variable annuity for a tax-qualified retirement plan, you receive no additional tax-deferred treatment beyond what is provided in your current plan. Therefore, you should consider a variable annuity only if other benefits are desired, such as a death benefit or payout options that can provide guaranteed income for life.
At the end of the day, variable annuities may help you grow and protect your qualified plan assets.

17. & Questions Answers Thank You!
That brings us to the end of today’s seminar. You have been a great audience, and I sincerely want to thank each and every one of you for joining me today.
One last suggestion before I open it up to general questions: Regardless of where you are in the retirement planning process, I urge you to take The Retirement Red Zone seriously and to get help navigating this potentially challenging period of time in your investing life. A financial professional can help you evaluate your retirement investment strategy to determine whether you are adequately prepared for The Retirement Red Zone.
I also want to encourage you to find out more about how a variable annuity from Prudential Annuities might help you meet your goals for retirement. Again, annuities are unique products with features and benefits that may be ideal for the Red Zone investor. Remember, you may reduce downside risk, capture upside income potential, and guarantee life-long income. That should be the mantra of your retirement planning efforts.
Let me leave you with this: You’re now armed with some very powerful information and have been exposed to an investment solution that may help you overcome the various challenges of retirement. The time to make smart choices is now. After all, retirement should be the time of your life.
If you don’t currently work with a financial professional, I’d be happy to meet with you. Please see me before you leave, and we can schedule an appointment.
Now I’d be happy to take your questions.
(Speaker Instructions: If you are going to present one, some or all of the income or accumulation benefit modules from [Why Prudential Annuities? Optional Income & Accumulation Benefits, ], please begin now.
If not, conclude your presentation with the disclosure slides that follow.)

18. 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 prospectus, which can be obtained from your financial professional. Please read the prospectus carefully before investing.
This material was prepared to support the marketing of variable annuities. Prudential, its affiliates, its distributors and their respective representatives do not provide tax or legal advice. Any tax statements contained herein were not intended to be used for the purpose of avoiding U.S. federal, state or local tax penalties. Please consult your own advisor as to any tax or legal statements made herein.
Your needs and suitability of annuity products and benefits should be carefully considered before investing.
Because qualified retirement plans, IRAs and variable annuities offer a tax-deferral feature, you should carefully consider the other features, benefits, risks, and costs associated with a variable annuity before purchasing one in either a qualified plan or IRA. Before purchasing a variable annuity, you should take full advantage of your 401(k) and other qualified plans.
Annuity contracts contain exclusions, limitations, reductions of benefits and terms for keeping them in force. Your licensed financial professional can provide you with complete details.
Optional living benefits may not be available in every state and may not be elected in conjunction with certain optional benefits. Optional benefits have certain investment, holding period, liquidity, and withdrawal limitations and restrictions. The benefit fees are in addition to fees and charges associated with the basic annuity.
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19. Highest Daily Lifetime 6 Plus and Spousal Highest Daily Lifetime 6 Plus use a predetermined mathematical formula to help manage your guarantee through all market cycles. Each business day, the formula determines if any portion of the account value needs to be transferred into or out of the AST Investment Grade Bond Portfolio (the "Bond Portfolio"). Amounts transferred by the formula depend on a number of factors unique to your individual annuity and include: (i) The difference between the account value and the Protected Withdrawal Value; (ii) How long you have owned Highest Daily Lifetime 6 Plus or Spousal Highest Daily Lifetime 6 Plus; (iii) The amount invested in, and the performance of, the permitted subaccounts; (iv) The amount invested in, and the performance of, the Bond Portfolio; and (v) The impact of additional purchase payments made to and withdrawals taken from the annuity. Therefore, at any given time, some, most, or none of the account value may be allocated to the Bond Portfolio. Transfers to and from the Bond Portfolio do not impact any income guarantees that have already been locked in. The Protected Withdrawal Value is separate from the account value, and not available as a lump sum. Any amounts invested in the Bond Portfolio will affect your ability to participate in a subsequent market recovery within the permitted subaccounts. Conversely, the account value may be higher at the beginning of the market recovery; e.g., more of the account value may have been protected from decline and volatility than it otherwise would have been had the benefit not been elected. Please note: You may not allocate purchase payments or transfer account value into or out of the Bond Portfolio. See the prospectus for complete details.
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20. The benefit payment obligations arising under the annuity contract guarantees, rider guarantees, or optional benefits and any fixed account crediting rates or annuity payout rates are backed by the claims-paying ability of the issuing insurance company. Those payments and the responsibility to make them are not the obligations of the third party broker/dealer from which this annuity is purchased or any of its affiliates. They are also not obligations of any affiliates of the issuing insurance company. None of them guarantees the claims-paying ability of the issuing insurance company. All guarantees, including optional benefits, do not apply to the underlying investment options. Variable annuities are issued by Pruco Life Insurance Company (in New York, Pruco Life Insurance Company of New Jersey, Newark, NJ or by Prudential Annuities Life Assurance Corporation and distributed by Prudential Annuities Distributors, Inc., Shelton, CT. Both are Prudential Financial companies and each is solely responsible for its own financial condition and contractual obligations. Prudential Annuities is a business of Prudential Financial, Inc. Prudential, Prudential Annuities, Prudential Financial, the Rock logo, the Rock Prudential logo and The Retirement Red Zone are registered service marks of The Prudential Insurance Company of America and its affiliates. © 2010 The Prudential Insurance Company of America Issued on contract: P-RID-HD6(8/09), RID-HD6(8/09), P-RID-HD6(2/10), P-B/IND(2/10), P-L/IND(2/10), P-X/IND(2/10), P-CR/IND(2/10), MDLV/CRT(10/00), N-ASP/CRT(04/02), 2ASL/CRT(10/01), ASL/CRT(10/95), ASXT165/CRT(09/01), XT8/CRT(06/08), RJ-ASP/CRT(11/08)-04,05, B/CRT(3/06) or Bb/IND(7/07) depending on which state you are referring to (the following states use Bb/IND(7/07): MA, MN, NH, TX, WA, IA, MD, NC, UT, WI, KS, ME, ND, VT, WI), L/CRT(3/06), X/CRT(3/06), et al or state variation thereof.
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[PPR WO# ML A MS SBA UBS0310]

21. Thank You!
[Financial Professional Name] [Title] [Firm] [License #, if in AR or CA] [Phone #] [ address]
[Optional Slide]
Option 1 – Use this slide in its current location if NOT using [Why Prudential Annuities®? Optional Income & Accumulation Benefits, ]
Option 2 – Delete slide in its current location and add to end of [Why Prudential Annuities®? Optional Income & Accumulation Benefits ]