March 29, 2010
Mark Cowan
Office of Insurance Products
Division of Investment Management
Securities and Exchange Commission
100 F Street, N.E. (Mail Stop 5-6)
Washington, D.C. 20549
ATTN: Document Control - Edgar
RE: Post-Effective Amendment No. 55 on Form N-4
RiverSource Variable Account 10 ("Registrant")
RiverSource Retirement Advisor 4 Advantage Variable Annuity
RiverSource Retirement Advisor 4 Select Variable Annuity
RiverSource Retirement Advisor 4 Access Variable Annuity
File Nos. 333-79311/811-07355
Dear Mr. Cowan:
This letter is in response to Staff's comments received on or about March 23,
2010 for the above-referenced Post-Effective Amendment ("Template Filing") filed
on or about Feb. 5, 2010. Comments and responses for the Template Filing are
outlined below.
COMMENT 1. Expense Summary
a. Please confirm that footnotes will be displayed in a smaller font
size than the body of the tables.
RESPONSE: Confirmed.
b. Because the surrender charge declines to 0% after the 10th year,
why, with respect to footnote *, is the last sentence of this footnote
necessary? Also, why the references to "certain states" instead of identifying
the states? Without identifying the states, the disclosure is of little use.
RESPONSE: Registrant has revised surrender charge footnote as follows:
* In Alaska, Arizona, Colorado, Connecticut, Georgia, Hawaii, Illinois, Iowa,
Michigan, Minnesota, Mississippi, Montana, New Jersey, North Carolina,
Oregon, Utah and Washington the ten-year surrender charge schedule is 8%
for years 0-2, 7% for year 3 and declining by 1% each year thereafter until
it is 0% for years 10+. For contracts issued in Alabama and Massachusetts,
surrender charges are waived after the tenth contract anniversary for all
payments regardless of when payments are made.
COMMENT 2. Portfolio Navigator Program
a. Please explain how, for contracts purchased prior to May 10, 2010,
transferring assets from the model portfolios to a corresponding investment
option (unless a contract owner "opts-out" and remains invested in a "static"
rather than "dynamic" model portfolio), based on the recommendation of
RiverSource
Investments (the investment adviser under the old PN program and new PN
program), is consistent with the Investment Advisers Act.
RESPONSE: Each participant in the Portfolio Navigator program (the "Program") is
an investment advisory client of RiverSource Investments (the "Adviser") and has
an investment advisory agreement with the Adviser meeting the requirements of
the Investment Advisers Act of 1940 (the "Advisers Act"). That agreement
provides that the Adviser has the authority to make its model portfolio
recommendations under the Program using one or more funds-of-funds as investment
options. Participants were informed of this authority in the investment advisory
brochure required under Rule 204-3 under the Advisers Act. Furthermore, they
were given significant advance notice of the transfer to the funds-of-funds (the
"Transfer") and of their right to opt-out of the Transfer, consistent with
disclosure requirements under the Advisers Act. The notice set forth the
Adviser's recommendation and each participant's right to either accept the
recommendation or opt out, and explained that their contract value would be
transferred pursuant to the Adviser's recommendation unless they opt out.
The Advisers Act does not prohibit an investment adviser from having this
type of authority to make recommendations. The Transfer is being conducted
consistent with the established structure of the Program, as disclosed in the
brochure and set forth in the agreement.
b. Please explain your legal basis for transferring contract owners
from a model or investment option to a fund-of-funds once they begin taking
income?
RESPONSE: The automatic transfer of participants, when they begin taking
withdrawals from the aggressive or moderately aggressive Program investment
option to the moderate investment option, has been a specific, formulaic feature
of the Program set forth in the relevant product prospectuses and required as a
specific contractual feature of the living benefit riders to which such
transfers apply. Transferring participants to the moderate fund-of-funds,
instead of to the moderate model portfolio, is consistent with the terms of the
prospectuses and riders and the disclosures that were provided to the Program
participants. The investment objective and policies of each fund-of-funds will
be substantially similar to those of each corresponding model portfolio.
Participants were reminded of this element of the Transfer in the materials sent
to them regarding the Transfer.
c. Please describe how the 2-year fund cap will operate. How can it be
imposed only on people who purchase prior to May 10, 2010? Why would it exist
for only 2 years given that the optional benefit riders are long term
investments and contract owners do not have the option of going elsewhere (i.e.,
investing in other underlying funds) and maintaining the benefit?
RESPONSE: The Adviser and its affiliates have agreed to an expense cap on the
funds-of-funds direct(1) expenses, as well as to expense caps on many of the
underlying funds in which the funds-of-funds are expected to invest (the
"Standard Expense Caps"). Two share classes are being created for each of the
funds-of-funds, Class 2 and Class 4, each with the Standard Expense Caps.
Current Program participants who do not opt out of the Transfer will
beneficially own Class 4 of the fund-of-funds that corresponds to their current
model. New contract owners will be offered Class 2 of the funds-of-funds.
The Adviser and its affiliates have agreed to a separate, two year waiver
of Rule 12b-1 fees on Class 4 of each fund-of-funds in order to limit the
potential increase in fees that these individuals might otherwise experience
(the "Separate Waiver"). The operation of the Separate Waiver and Standard
Expense Caps are disclosed in the
(1) The direct expense cap for each of the funds-of-funds is 0.32%. Based on
current estimates of "Other Expenses," direct expenses are projected to be
under the current direct expense cap. To the extent "Other Expenses"
increase, the direct expense cap would operate as a ceiling on the amount
of the increase that would be experienced by contract owners.
funds-of-funds prospectus and in each of the underlying funds' prospectuses,
respectively, and, as applicable, consistent with the requirements of new Form
N-1A. It is expected that, after expiration of the Separate Waiver, Class 2 and
Class 4 will have identical expenses.
As noted in response to Comment 2.a, above, contract owners may choose to
opt out of the Transfer and, by doing so, maintain their investment in their
current funds, the fees for which would not change immediately. Such fees,
however, could change over time (including, potentially, increase over time)
depending on various factors, such as expense cap commitments (or lack thereof)
by those funds' sponsors. For Current Program participants who do not opt-out of
the Transfer, expenses will be capped in the immediate term (limiting potential
immediate increase). It is more difficult to predict the fee levels of funds,
and the experience of contract owners, over time.
d. The second sentence of the third page of disclosure regarding the
PN Rider needs to specify how many investment options may be used at a time.
RESPONSE: Complied. The second sentence of the third page of disclosure has been
revised as follows:
You may not use more than one investment option or model portfolio at a
time.
In addition to the comments listed above, the Staff has requested that we make
the following representations on behalf of the Registrant. In connection with
the Post-Effective Amendment listed above, RiverSource Life Insurance Company
(the "Company"), on behalf of the Registrant, hereby acknowledges the following:
The disclosures in the filing are the responsibility of the Company and the
Company is fully responsible for the adequacy and accuracy of the
disclosures in this filing. The Company represents to the Commission that
comments made by the Commission, or the staff acting pursuant to delegated
authority, or changes to disclosure in response to staff comments in the
filing reviewed by the staff, do not foreclosure the Commission from taking
any action with respect to the filing, and the Company represents that it
will not assert this action as a defense in any proceeding initiated by the
Commission or any person, under the federal securities laws of the United
States.
Please note that a separate 485(b) (1) (vii) request will be submitted for other
products that will be adding the same feature. If you have any questions
concerning this filing, please contact me at (612) 671-2237, or Boba Selimovic
at (612) 671-7449.
Sincerely,
/s/ Rodney J. Vessels
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Rodney J. Vessels
Assistant General Counsel