ANNUITY ENDORSEMENT
Individual Retirement Annuity (IRA) Contracts
Maintained as a Traditional IRA or SEP-IRA
For purposes of qualifying this Contract as an Individual Retirement Annuity
maintained as a Traditional IRA or Simplified Employee Pension (SEP) IRA under
the Code, this annuity endorsement is made part of the IRA Contract to which it
is attached. It modifies certain provisions of this Contract by adding the
following provisions. All Contract provisions apply except as described or
modified in this endorsement. If there is any conflict between Contract and
endorsement provisions, the endorsement provisions take precedence.
DEFINITIONS
Code
The Internal Revenue Code of 1986, as amended, its regulations thereunder and/or
promulgations of the Internal Revenue Service, as applicable.
Contract
When used in this endorsement, Contract means the annuity contract or annuity
certificate.
Required Beginning Date
Your Required Beginning Date is the first day of April following the calendar
year you reach 70 1/2.
Required Minimum Distributions
The minimum distributions that Code Sections 408(b)(3) and 408(a)(6) require to
be distributed from an IRA, beginning not later than your Required Beginning
Date.
Traditional IRA
An Individual Retirement Annuity described in Code Section 408(b).
SEP-IRA
A Simplified Employee Pension Individual Retirement Annuity used in conjunction
with a SEP Plan established by an employer pursuant to Code Sections 408(b) and
(k).
GENERAL PROVISIONS
This Contract is established for the exclusive benefit of the individual or his
or her beneficiaries. Your interest is nonforfeitable and nontransferable.
If this endorsement is used in the case of a rollover from a Contract maintained
as a tax-sheltered annuity under Code Section 403(b), any loan provisions in the
Contract are hereby deleted.
Traditional IRA
If this Contract is intended to qualify as an Individual Retirement Annuity
(IRA), we agree to and reserve the right to modify this Contract to the extent
necessary to qualify this Contract as an IRA, as described in Code Sections
408(b) and 219 of the Code, as amended and all related sections and regulations
which are in effect during the term of this Contract.
SEP IRA
If this Contract is intended to qualify as a SEP IRA, we agree to and reserve
the right to modify this Contract to the extent necessary to qualify this
Contract as a SEP IRA as described in Code Sections 408(b) and 408(k), as
amended and all related sections and regulations which are in effect during the
term of this Contract.
Annual Reports
We will furnish annual calendar year reports concerning the status of the
annuity and such information concerning Required Minimum Distributions as
prescribed by the Commissioner of Internal Revenue.
PURCHASE PAYMENTS/CONTRIBUTIONS
All purchase payments/contributions must be in cash. This Contract does not
require fixed purchase payments.
Maximum permissible annual contribution and restrictions on kinds of
contributions.
131061 (9/02)
(a) Except in the case of a rollover contribution (as permitted by Internal
Revenue Code Sections 402(c), 402(e)(6), 403(a)(4), 403(b)(8), 403(b)(10),
408(d)(3) and 457(e)(16)) or a contribution made in accordance with the terms of
a Simplified Employee Pension (SEP) as described in Code Section 408(k), the
total of such contributions shall not exceed the lesser of your compensation for
the year or:
- $3,000 for any taxable year beginning in 2002 through 2004;
- $4,000 for any taxable year beginning in 2005 through 2007; and
- $5,000 for any taxable year beginning in 2008 and years thereafter.
After 2008, the limit will be adjusted by the Secretary of the Treasury for cost
of living increases under Code Section 219(b)(5)(C). Such adjustments will be in
multiples of $500.
(b) If you are 50 or older, the annual cash contribution limit described above
is increased by:
- $500 for any taxable year beginning in 2002 through 2005; and
- $1,000 for any taxable year beginning in 2006 and years thereafter.
(c) If you currently participate in a SIMPLE IRA plan, your employer cannot make
contributions (made pursuant to the terms of your employer's SIMPLE IRA plan)
to this Contract. Also, you cannot transfer or rollover funds attributable to
contributions made by your employer under its SIMPLE IRA plan prior to the
expiration of the 2 year period beginning on the date you first participated
in your employer's SIMPLE IRA plan.
SEP IRA Maximum Purchase Payments
If this Contract is maintained in connection with a Simplified Employee Pension
Plan, employer purchase payments for any taxable year may not exceed the limit
described in Code Section 402(h).
Annual employer purchase payments to a SEP IRA under a SEP Plan may be made with
respect to the taxable year in which you attain age 70 1/2 or any later year.
ANNUITY PAYMENT PLAN PROVISIONS
Change of Settlement Date
You may change the Settlement Date shown for this Contract. Tell us the new date
by written request. In all cases, the maximum Settlement Date is the earlier of:
1. The later of:
(a) April 1 following the calendar year in which you attain age 70 1/2, or
(b) Such other date which satisfies the minimum distribution requirements under
Code Sections 408(a)(6) or 408(b)(3);
or
2. The later of:
(a) The Contract anniversary on or preceding your 85th birthday, or
(b) The 10th Contract anniversary; or
(c) Such other date as agreed upon by us.
If you select a new Settlement Date, it must be at least 30 days after we
receive your written request at our corporate office.
Annuity Payment Plans for Contract Owners
You can schedule receipt of irrevocable annuity payments according to one of the
plans (A through E) described in your Contract, or another plan agreed to by us,
provided:
(i) the plan selected provides for payments over your life or the lives of you
and your designated beneficiary and/or the plan selected provides for a period
certain not extending beyond your life expectancy or the joint and last survivor
expectancy of you and your designated beneficiary;
(ii) payments are made in periodic payments at intervals of no longer than 1
year and must be either nonincreasing or they may increase only as provided in
Q&As 1 and 4 of Section 1.401(a)(9)-6T of the Temporary Income Tax Regulations;
131061 (9/02)
(iii) the plan selected satisfies the incidental benefit requirements specified
in Q&A-2 of Section 1.401(a)(9)-6T; and
(iv) the first required payment must be the payment that is required for one
payment interval. The second payment need not be made until the end of the next
payment interval.
For purposes of this section, required distributions are considered to commence
on your required beginning date, or if applicable, on the date distributions are
required to begin to your surviving spouse. However, if you begin receipt of
payments pursuant to an irrevocable annuity payment plan that meets the
requirements of Section 1.401(a)(9)-6T, Required Minimum Distributions are
considered to commence on your annuity starting date.
REQUIRED MINIMUM DISTRIBUTIONS
Distributions before death must commence no later than 70 1/2.
Notwithstanding any provision of this IRA to the contrary, the lifetime
distribution of your interest in this Contract shall be made in accordance with
the requirements of Code Section 408(b)(3) and the regulations thereunder, the
provisions of which are herein incorporated by reference. If distributions are
not made in the form of annuity payments that have commenced on an irrevocable
basis (except for acceleration), then distribution of the interest in the IRA
must satisfy the requirements of Code Section 408(a)(6) and the regulations
thereunder.
Your entire interest will commence to be distributed no later than your Required
Beginning Date.
Your "interest" in the IRA includes the amount of any outstanding rollover,
transfer and recharacterization under Q&As-7 and -8 of Section 1.408-8 of the
Income Tax Regulations. "Interest" shall also include the actuarial value of any
other benefits provided under the IRA, such as guaranteed death benefits as may
be required by the Commissioner of Internal Revenue.
DISTRIBUTIONS UPON DEATH
(a) If you have commenced irrevocable annuity payments according to one of the
plans (A through E) described in your Contract, upon your death the remaining
portion of your interest will continue to be distributed under the annuity
payment plan chosen.
(b) If you have not commenced irrevocable annuity payments according to one of
the plans (A through E) described in your Contract, upon your death, in lieu of
receiving a lump sum, your designated beneficiary may receive payments under one
of the following options:
1. Annuity Payment Plan for Beneficiaries
Payments may be made under one of the irrevocable annuity payment plans (A
through E) described in your Contract, provided:
(i) your beneficiary elects the plan within 60 days after we
receive all administrative requirements, including due proof of death;
(ii) the plan provides payments over a period which does not exceed the
life or life expectancy of your beneficiary and or the plan selected provides
for a period certain not extending beyond the life expectancy of your
beneficiary;
(iii) if your beneficiary is your surviving spouse and your death
occurs prior to your Required Beginning Date, payments irrevocably commence by
the later of 12/31 of the year following the year of your death or 12/31 of the
year you would have attained age 70 1/2; and
(iv) if your beneficiary is someone other than your surviving spouse,
or if your death occurs on or after your Required Beginning Date, payments
irrevocably commence no later than 12/31 of the year following the year of your
death.
2. Alternative Payment Plans
If upon your death your beneficiary does not wish to elect one of the
irrevocable annuity payment plans (A through E) described in the
131061 (9/02)
Contract, in lieu of distributing your entire interest in a lump sum, your
designated beneficiary may choose to receive payments according to an
alternative plan as agreed to by us provided:
(i) the beneficiary elects the plan within 60 days after we receive due
proof of death;
(ii) if your sole designated beneficiary is your surviving spouse, your
entire interest will be distributed, starting by the end of the calendar year
following the calendar year of your death (or by the end of the calendar year in
which you would have attained age 70 1/2, if later), over such spouse's life or
life expectancy corresponding to such spouse's age each year. If your surviving
spouse dies before required distributions commence to him or her, the remaining
interest will be distributed, starting by the end of the calendar year following
the calendar year of your spouse's death, over the spouse's designated
beneficiary's remaining life expectancy determined using such beneficiary's age
as of his or her birthday in the year following the death of the spouse;
(iii) if your designated beneficiary is someone other than your
surviving spouse, your entire interest will be distributed, starting by the end
of the calendar year following the calendar year of your death, over the
remaining life expectancy of your designated beneficiary, with such life
expectancy determined using the age of your beneficiary as of his or her
birthday in the year following the year of your death and reduced by 1 for each
subsequent year;
(iv) if you die before your Required Beginning Date and there is no
designated beneficiary, or if elected by your designated beneficiary, your
entire interest will be distributed by the end of the calendar year containing
the fifth anniversary of your death (or of your spouse's death in the case of
the surviving spouse's death before distributions are required to begin);
(v) if you die on or after your Required Beginning Date and there is no
designated beneficiary, your entire interest will be distributed, starting by
the end of the calendar year following the calendar year of your death, over
your remaining life expectancy determined using your age in the year of your
death and reduced by 1 for each subsequent year; and
(vi) the life expectancy of your beneficiary is determined using the
Single Life Table in Q&A-1 of Section 1.401(a)(9)-9 of the Income Tax
Regulations.
131061 (9/02)
3. Sole Spouse Beneficiary Option
If your sole designated beneficiary is your surviving spouse, your spouse may
elect to treat this Contract as his or her own IRA and may choose an irrevocable
annuity payment plan option available to contract owners. If your surviving
spouse dies after distributions commence to him or her in the form of one of the
annuity payment plans (A through E) described in the Contract, the remaining
interest will continue to be distributed under the annuity payment plan chosen.
An election to treat the Contract as his or her own will be deemed to have been
made if such surviving spouse makes a contribution to the IRA or fails to take
required distributions as a beneficiary.
Designating a Beneficiary
If the death benefit under this Contract becomes payable to your beneficiary,
your beneficiary shall have the right to name a beneficiary. Any such request
from your beneficiary must be made on a form satisfactory to us.
Endorsement Effective Date
This endorsement is effective as of the date the Contract is issued or the date
the Contract is endorsed, whichever is later.
IDS Life Insurance Company
Secretary
131061 (9/02)