How do withdrawals impact living benefit guarantees?

• A. Withdrawals increase the guaranteed base
• B. Withdrawals affect taxes only
• C. Withdrawals have no effect on guarantees
• D. Withdrawals reduce the account value and may reduce guaranteed base, potentially reducing future guaranteed withdrawals

Answer: (D)

Living benefit guarantees rely on a built‑in guaranteed withdrawal base that sets how much you can take in the future under the guarantee. When you make withdrawals, you’re drawing down the contract, and in most designs the withdrawal activity can reduce that base. If the base drops, the amount available under the guarantee for future withdrawals can also drop, potentially reducing how much you can take later. In short, taking withdrawals lowers the account value and can lower the guaranteed base, which may shrink future guaranteed withdrawals.